Bad credit is a very frustrating thing to deal with. It can leave you with less financial options and worse opportunities. But, you can fix your credit in a few simple steps and protect it for the future.
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. In order to get the card, you will have to fund the account as sort of an insurance that shows the bank your debts are going to be paid. Using this new credit card in a responsible manner will help to build back up your good credit rating.
Installment Account
If you want to boost your credit score and earn a decent living, open an installment account. You should make sure it is an installment account that you will be able to pay into every month. Your FICO score will rise over time, if you responsibly manage this type of account.
Getting a reduced interest rate is the easiest way to reduce your overall debt. Some companies that charge high interest rates are running the risk of having those rates challenged by consumers. Remember you agreed to pay any interest that accrued over the life of the account. Suing your creditors can be effective in some circumstances in cases where the court considers the interest rates to be excessive.
Credit Counselor
Make sure you research a credit counselor before you visit them. There are a lot of unscrupulous agencies scattered in among the few legitimate credit counselors that are really there to help you. Other programs, while they sound good, are complete and total scams. Consumers should always check to see if a credit counselor is not a scam before deciding to use them.
Do not try something that you do not know is legal or illegal. There are plenty of credit scams that purport to erase your existing credit file and create a new one. Creating a new credit file is very illegal and you can be easily caught. The legal proceedings will be costly, and you may even be sent to jail.
Contact your creditors to request a reduction in your credit line. This helps you from overspending and shows that you want to borrow responsibly and it will help you get credit easier in the future.
Credit Score
Find out how your debt settlement contract will make your credit score look. There are methods that are going to be less damaging than another, and all should be researched before you enter an agreement with a creditor. The creditor is only interested in receiving the money due, and is not concerned with your credit score.
Consider joining a credit union. They offer a lot of benefits to their members and it can be easier to obtain a line of credit from them. Credit unions often offer better interest and more options than chain banks do.
Dispute any errors that are on your credit report so they are removed. Create a dispute letter for agencies that have the error, and submit additional supporting documents along with it. Ask for a return receipt so that you can prove that the agency got your package.
Check your credit card statement each month and make sure there aren’t any discrepancies. If you spot any mistakes, contact the credit company right away to keep them from reporting the mistakes.
If you work out a payment plan with a creditor, you should make sure to get the plan in writing. This will protect you should the company change its policies. Once you finish making all your payments, be sure to send that information to the credit agencies in writing.
Do everything you can to avoid filing bankruptcy. Bankruptcy does not drop from your credit report until ten years have passed, so you will deal with the fallout for a significant period of time. Although it sounds like an easy way to get rid of debt, it will affect your life for a significant amount of time. Filing for bankruptcy will make it very difficult for you to qualify for credit in the future.
Collection Agencies
One of the biggest stressors can be bad dealings with debt collection agencies. A consumer has the legal option of using cease and desist letters to dissuade collection agencies, but it is vital to keep in mind that C&D letters only stop harassment. Letters such as these prevent calls from collections agencies, but the consumer must still pay the debts under dispute.
Simple tips like these will help you fix your credit problems and keep your credit healthy. The time you take to learn how to repair your credit is worth the trouble it saves you.