Having bad credit can prevent people from successfully taking out loans, leasing a car, or making other important financial decisions. Being negligent or delinquent when it comes to bills can hurt your credit scores. These tips can help you improve your credit score.
Getting a traditional home loan can be difficult, if not impossible, with imperfect credit. 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. You may even qualify for an FHA loan if you don’t have enough money for a down payment or the closing costs.
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. These are extremely easy to qualify for. A secured credit card looks just like a regular card, and works like a regular card, but you have to have the necessary money in an account to guarantee payment. A new credit card, used responsibly, will help repair your credit rating.
If you have credit cards with balances that are greater than fifty percent of the maximum, you should pay those down as quickly as possible. It’s best to keep all of your credit cards below the fifty percent mark! If your credit card balances exceed 50% of their limits, it will lower your credit score, so spread your debt over multiple cards, or better, pay down the balances.
A great credit score should allow you to get a mortgage on the house of your dreams. When your mortgage is paid in full, you will be rewarded with increased scores on your credit file. Having a major asset like a house also looks good to potential creditors. This will also be useful in the event that you end up needing to borrow funds.
Interest Rates
Excessive interest rates can be contested. However, it is best not to sign contracts containing them in the first place. An interest rate that is shockingly high can possibly be ruled as illegal in certain cases. Remember you agreed to pay any interest that accrued over the life of the account. The only way you are legally able to sue the creditors is if you are able to prove that your interest rates are much too high.
Repairing your credit is actually pretty simple. The first step is to focus on paying your late bills. It is key that you pay them on time and in full. Do the best that you can. You will immediately see changes in your credit score when you begin to pay off your debts, especially those that are active.
Credit Counselor
Make sure you research a credit counselor before you visit them. Some counselors truly want to help you, while others are untrustworthy and have other motives. Other options are clearly scams. If you’re smart, you’ll make sure the credit counselor is not a phony first.
When attempting to improve your credit, you should go over any negative marks with a fine tooth comb. If you notice a mistake on your report, you could get some items crossed off. Even if the item itself is right, an error in the date or amount gives you the right to contest it.
The first step in credit repair is to close all but one of your credit accounts as soon as possible. Making one monthly payment will be easier than paying off different bills. By doing this, you can work towards completely paying off one credit card with a large debt, rather than working piecemeal with many smaller debts.
Check your credit card statement each month and make sure there aren’t any discrepancies. If there are mistakes, call the company. If the errors are not fixed, they could get reported to the major credit rating agencies.
If you want to send your children to college, or need a simple loan, your credit score matters. Even those with quite low scores and who carry a great deal of debt can fix their credit, by using these tips.
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