Having a bad credit rating can seriously delay your goals in life. It can make you feel like you are in debtors’ prison with no hope of escape. Here are a few easy tips on how you can fix your credit and make sure it stays positive in the future.
For those with imperfect credit, it can be hard to secure financing for a home. If this is the case, try to get an FHA loan, which are loans backed by federal government. FHA loans offer lower down payments and help with closing costs.
The first step in repairing your credit is figuring out a plan that works for you, and sticking with it. You must be dedicated to making some significant changes in the way you spend your money. Stick to the essentials, and avoid frivolous purchases at all costs. If the thing you’re looking at is not both necessary and within your budget, then put it back on the shelf and walk away.
Any of your credit cards with balances that are above 50% of your overall limit need to be paid off as soon as possible, until the balance is less than 50%. 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.
If you do not want to pay too much, contact your creditors and tell them you will not pay on a interest rate that is astronomical. It is bordering on illegal for credit card companies to charge you skyrocketed interest rates. You did sign a contract saying that you would pay off the debt. 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.
The first step to repairing your credit is paying what you owe. You should always make an effort to pay your bills on time and in full. Once you have started to pay towards your past-due accounts, you credit score will gradually improve.
Work with the companies to whom you owe money to get your debt back under control. This will keep you from increasing the amount of debt that you have. Some of your options include negotiating for a later due date, and asking for reductions in your minimum monthly payments.
If an action can result in imprisonment, draw the line. There are plenty of credit scams that purport to erase your existing credit file and create a new one. This is illegal and you will eventually be caught. The end result of getting caught during the crime could be expensive legal fees and a possibility of time behind bars.
Look through your credit card statement each month and make sure that it is correct. Should there be any mistakes, contact the company and talk to them to avoid being reported to the credit companies.
Any time you establish any payment plan with any creditor, make sure you get it in writing. This provides you with documentation that an agreement is in place in case the company changes hands or the creditor tries to change the terms of the agreement. If you have finished paying it off, you should request a confirmation so you can send it to the credit reporting agencies.
Filing for bankruptcy is a bad idea. This will reflect on your credit report for the next 10 years. It may sound like a good idea at the time to rid yourself of all your debt, but it will affect you later on. Filing bankruptcy makes it difficult if not impossible to get anything involving credit, like credit cards and loans, in the future.
When you start fixing your credit, pay down balances on the credit cards as soon as you can. Sort your credit cards by balance and interest rate with the highest first. Then determine which credit card is the highest either in balance or interest rate and start to pay it off first. Creditors will see this action as a sign that you are responsible and educated.
Carefully read the small print on your statements. Always check to make sure that you are being charged correctly, and not being double charged or charged for items that you did not buy. You are responsible for the accuracy of information on your credit card statments.
To accomplish getting a better rating on your credit, pay down the balances of your current accounts. Paying off your balances will have a perceptible positive impact on your credit score. The FICO system notes when balances are at 100, 80, 60, 40 and 20 percent of your total credit available.
Make sure that the credit repair agency you choose to work with is reputable. There are lots of disreputable credit score repair agencies out there. Indeed, some people have fallen prey to credit improvement scams. Check online reviews about the company, the Better Business Bureau, and even the State Attorney General’s office to find out what their reputation is before signing anything or giving them any money or account numbers.
It is not legal for collectors to threaten you, so always report them if they get too aggressive. You should be aware of the laws that safeguard consumers’ rights when dealing with debt collectors.
Talk to creditors directly to figure out a different way to pay your bill if you cannot afford your monthly payments. You may be able to defer some lines of credit, like federal student loans. You can refinance other loans, like vehicle loans. In any case, you want to protect your credit and creditors may be willing to work out a repayment plan with you. This is also a good idea because it lets you shift your attention to your more inflexible debts, where you don’t have the option of negotiating your payments down.
This simple advice can aid you in repairing your credit issues and help you keep your credit in good shape. Credit rating affects your life in many ways, so make sure to learn all you can about it.