Bad credit is a very frustrating thing to deal with. Your financial options will diminish, fewer options will be open to you and you will not be able to take advantage of new credit line offers. That said, it is possible to restore your credit to its former glory and prevent it from being wrecked again.
If you don’t have very good credit, financing your home may not be easy. Look into alternative financing options like FHA loans. FHA loans offer lower down payments and help with closing costs.
You can get better interest rates on credit cards and loans when you have a good credit score. Lower interest rates will reduce the amount of your monthly payment, and can also make it easier to repay your debt faster. The key to paid off credit is to find a great offer and a competitive rate so that you can pay off your debt and get a better credit score.
Installment Account
To improve your credit rating, set up an installment account. An installment account requires that you make a minimum payment each month. It is imperative that you only take an installment account that is affordable. If you use these accounts, your score will go up rapidly.
If you don’t want to pay too much at a time, you can avoid paying higher interest rates than you started with. You may be able to challenge an interest rate that is extremely high. However, you signed a contract agreeing to pay off interests. If you decide to sue your creditors, you should be able to have the interest rates recognized as too high.
A good tip is to work with the credit card company when you are in the process of repairing your credit. This will assure them that you want to handle your debt and keep you from getting even further behind. See if the company will allow you to modify the monthly due date, or reduce the payments.
Do not involve yourself in illegal activities. There are various online scams that involve creating a fresh credit file. This is illegal and you will most certainly get caught. Think of the legal costs and the possibility of doing hard time.
If you are trying to repair your credit, check all of your negative reports very carefully. Even if the item itself is correct, any small mistake in the item, such as an inaccurate date or amount, may let you have the whole thing taken off your credit report.
If you are able to successfully negotiate a payment schedule for a debt, it is important to request a copy of the agreement in writing. This is the only way that you have of protecting yourself. After you have paid your debt, request appropriate documentation that confirms your zero balance.
If at all possible, avoid filing bankruptcy. Bankruptcy can make getting credit almost impossible for many years. You may think that bankruptcy is your only option to rid yourself from debt, however look at your long term financial goals before deciding to file for it. You may not qualify for auto financing or a credit card after filing for bankruptcy protection.
Pay the balances on all credit cards as soon as you can to start the credit score improvement process. First work on the cards with the steepest balances or interest rates. This action will show creditors that you are being responsible with credit.
Make sure that you always read your credit card statement entirely. Make sure that all of your fees and charges are correct and that there are not any items that were not authorized by you. It is only your responsibility to make sure everything is correct and error free.
Credit Score
If you want a higher credit rating, you will need to bring down the balance on any existing accounts. Having a lower balance will boost your credit score. The system that determines your credit score can recognize the percentage of credit you have that you are currently using.
Lenders are not likely to include the statement in their decision process. It can actually backfire. It brings attention to a part of your report you would rather a lender not look at very closely.
Avoid using credit cards. Use cash for purchases instead while you are building back your credit. If you absolutely have no other choice but to use a credit card, pay off the balance in full as soon as possible.
These tips can help you repair your credit and keep it high. 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.