Having poor credit can be a serious hindrance to moving forward with your life. Bad credit and keep you from great opportunities as they arise. However, a few simple steps can be taken back in the direction of a good score.
If you are buying a home it will not always be easy, and even more difficult if your credit is bad. There is, however, alternative types of funding available that are offered by the banks. FHA and USDA are two such agencies who offer finance to those with lower credit scores, sometimes with low down payment and closing cost clauses. If you do not have a down payment or money for closing, consider a FHA loan
The first step in repairing your credit is figuring out a plan that works for you, and sticking with it. Unfortunately, the way that you approach spending money will probably have to be revamped. Stick to the essentials, and avoid frivolous purchases at all costs. You should only make a purchase if it is necessary and it fits in your budget.
Credit Card
When your credit is so bad that you can’t get a ‘regular’ credit card, a secured one will help you to repair your credit. Secured credit card applications have a high rate of approval because you must fund a security deposit against your credit limit. A responsibly used new credit card will begin healing your credit score.
If you find that you have a credit card and the interest rate has gotten to high, you do have the option to not pay the debt, though there will be consequences. If you are being charged a distressingly high interest rate, you may be able to talk to your creditor. Remember that you agreed to pay that interest when you signed the contract. If you plan on suing your creditors, you may be capable of having the interest rates viewed as being too high.
Start paying on bills to help your credit. Even more important than just paying your bills, is to pay off the entire balance, and pay them on time. After you have paid off some old bills, you will see an immediate improvement in your credit rating.
When trying to rehabilitate your credit, it is important to work with each credit card company you are indebted to. Maintaining contact shows your good faith and can help you minimize further debt. See if the company will allow you to modify the monthly due date, or reduce the payments.
Credit Card
Call your credit card companies and request that they lower your limit on your cards. Not only will this stop you from overspending, it will indicate responsible behavior to a credit card company, and may enable you to get future credit.
Before agreeing on settling a debt, find out how if the process will raise or lower your credit score. Some methods of credit settlement can be a blow to your credit score, so it’s important to check into your options and find one that won’t hurt you in the long term. The creditor is only interested in receiving the money due, and is not concerned with your credit score.
A first step in fixing your credit is to close all credit card accounts that are unnecessary. Aim to only have one account. You should arrange to make payments or make a balance transfer to your open account. Paying off one main credit card will be easier than paying off several cheaper ones.
Credit Card
Carefully check all charges on your monthly credit card statement for errors. Immediately report any errors to your credit card company to prevent a bad mark on your credit report.
Make sure you will get a plan in writing if you decide a payment plan is the best option for you with your creditor. Having the plan in writing will protect you if the creditor reneges on the plan or if your debt is transferred to another creditor. Upon completion of payment, make sure to get the receipt in writing and send it to the credit reporting agencies.
You should keep a low balance on your credit cards to improve your credit rating. You can up your credit rating just by paying down your balances. The system that determines your credit score can recognize the percentage of credit you have that you are currently using.
Collection Agencies
One of the most stressful things about poor credit is dealing with debt collection agencies. You have the option of sending a cease and desist letter to agencies to stop them from calling, but that doesn’t mean that your debt vanishes. You will still have to pay what you owe even if collection agencies stop calling you.
When you are involved in a credit crunch, you have many debts but not enough money to pay them. You should spread out the money you do have to spend so that all of your creditors get a share. Making payments, even just minimum ones, will prevent your debts from going into collection.
Credit Counseling
If you’re having problems budgeting your money or paying your debts, contact a credit counseling company that has a good reputation. Often times, these companies will work with the creditors to get negotiate a lower interest rate and an affordable payment plan that will help get your finances back on track. Credit counseling can give you the tools you need in order to keep track of your finances and stay out of debt in the future.
Simple tips like these will help you fix your credit problems and keep your credit healthy. Having a solid credit score can impact many important purchases that you make, so taking time from your busy schedule to read up on this subject is always a good idea.
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