Having bad credit can be stressful and annoying. It’s one of the main stumbling blocks to a successful life. A bad credit report closes doors to financial options and opportunities. Here are a few easy tips on how you can fix your credit and make sure it stays positive in the future.
The first thing you should do when trying to improve your credit is develop an effective plan and make a commitment to adhere to it. However, if you are not prepared to alter bad habits regarding your spending, nothing will ever change. Don’t buy anything unless you absolutely need it. Before making any purchase, determine if it is within your means and if it is indispensable. Don’t buy the item unless you answer “yes” to both of these questions.
Pay down any credit cards with a balance in excess of 50%, preferably getting them down to 30%. If you have a balance that is more than 50 percent, your credit score will drop. If you can, pay the balances on your cards; if not, do your best to pay as much as possible each month.
Interest Rates
Excessive interest rates can be contested. However, it is best not to sign contracts containing them in the first place. It is bordering on illegal for credit card companies to charge you skyrocketed interest rates. However, you have entered into a legal agreement that requires you to pay accrued interest. Suing your creditors can be effective in some circumstances in cases where the court considers the interest rates to be excessive.
Working closely with the credit card companies can ensure proper credit restoration. Avoid collection to improve your credit score. Talk to the company and see if you can change your due date or monthly fees.
Credit counselors should always be researched thoroughly before being consulted for credit score improvement. There are some legit counselors, and there are some that have ulterior motives. Some credit services are nothing more than fly-by-night scams. Wise consumers always verify that credit counselors are legitimate before dealing with them.
If your credit isn’t so hot, but you need new credit to demonstrate responsibility, then look up your local credit union. Local credit unions might have different credit products than national banks, because they can focus on local market conditions.
Officially dispute any errors you find on your credit reports. Gather all supporting documents and any errors you find, and send them with a letter to the credit reporting agencies. Include a request for a return receipt with the dispute package so that you can prove it was received by the appropriate agency.
Start living within your means. This will require a change in your thinking. Unfortunately, credit has been easier to get than ever. Many people are buying things that are unaffordable and end up paying more than they should for any item. It is important to look closely at your finances and see what you can actually afford and what you can not.
If you are able to negotiate a repayment plan with your creditor, be sure to get it in writing. You want documentation to back yourself up so there will be no problems in the future, and if the company owner changes you will have more of a chance of keeping your plan. Once it is paid off, you should get that in writing to send to the credit reporting agencies.
Credit Card
The most obvious way to get your credit repair journey going is to pay down those pesky credit card balances. Pay off high-interest debt first, as it grows the fastest. This effort will show the credit card companies that you are trying to pay your bills and be responsible.
This will make sure that you maintain a good credit status. Paying late is placed on your credit report which can hurt your chances of getting a loan.
When you receive a credit card statement you should immediately look at the statement. Ensure that all of the listed charges are purchases that you made, keeping an eye out for fraudulent charges. You should ensure everything is okay and does not have any errors.
Try to use credit cards only for purchases you can afford to pay off. Try to use cash instead for all of your purchases and bills. If you have a situation where you have to put a charge on your credit card, make a point to pay it off as soon as possible.
It is not legal for collectors to threaten you, so always report them if they get too aggressive. Laws which protect debtors exist, and it’s vital that you understand them.
Income Ratio
Pay down your debt. Potential creditors will look at your debt to income ratio. A high debt-to-income ratio will put you in a poor light when it comes to creditors. The majority of people will not be able to pay off debt in one swoop. Write regular payments into your budget until you can get it taken care of.
Learn the ins and outs of consolidation before you consider it as an option for your own debt situation. Consolidating all of your debts could make paying them off easier and give you a way to get your credit repaired sooner. This combines all of your debts into one manageable payment amount. Consider all aspects of consolidation to make sure it is the right choice for you.
Make sure that you keep records of everything when interacting with credit bureaus. Meticulously document every single contact, whether it’s snail mail, email, or phone calls. Send dispute letters by certified mail so that you have a paper trail proving you sent it and the credit reporting agency received it.
Having read these simple tips, the only thing left now is to apply them. Because a good credit rating is important in so many financial transactions, the time you spend learning about credit score repair is well-spent.
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