Are you struggling because you have bad credit? These days, many people have had tough financial challenges that have killed their credit score. This article will teach you how to protect and improve your credit.
Getting home finance can be quite tough when your credit rating is not good. In this situation, it is a good idea to try to obtain an FHA loan, because these loans are guaranteed by the federal government. Even when the resources for making down payments or paying closing costs are lacking, FHA loans can help.
A respectable credit score makes it much easier for you to purchase a home with a mortgage. If you pay your mortgage as agreed, your credit score will rocket into the stratosphere. The more equity you have in your home, the more stability the banks see in you. These benefits will pay off if you need to secure a loan.
If you find that you have a credit card and the interest rate has gotten to high, you do have the option to not pay the debt, though there will be consequences. It is important to know the terms of your original agreement for the debt you incurred. Usually if you agreed to the terms the terms will be upheld as legal. If you believe the charges are excessive and your debtor will not negotiate down the interest and other additional charges, state laws might provide you with additional avenues to pursue a reduction in these charges. Federal law provides that when you are billed by a collection company the fees and interest cannot exceed the amount of the original debt. 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.
When starting to repair your credit, pay your bill on time from now on. You must pay them on time and in full. As soon as you have cleared those old debts, you will see an immediate improvement in your credit score.
When you are trying to clear up your credit contact your credit companies. This prevents you from sinking further into debt or further damaging your credit score. Politely ask if it is possible to have your minimum monthly payment adjusted or due date changed.
Do not do anything that will make you end up in jail. There are many different places that claim they can help you get a new credit profile. You will be prosecuted, it is against the law. Legal repercussions will cost you a lot of money, and you could go to jail.
Credit Union
Try joining a credit union to begin a credit score. You may find that the credit union has more options and better rates to offer you than banks will.
Bankruptcy should be a last resort. This negative mark will stay on your report for 10 years. Bankruptcy not only zeros out your debt, it also zeros out your credit score. If you do file for bankruptcy, it will be extremely difficult to get approved for a loan or a credit card for many years, if ever.
Credit Cards
Pay the balances on all credit cards as soon as you can to start the credit score repair process. Start by paying the cards or accounts with the highest interest rates. This helps creditors realize that you are using credit cards wisely.
Lowering the balances on any currently revolving accounts will increase your credit score. By lowering your credit card balances, you will be able to improve your credit score. The FICO system notes when balances are at 100, 80, 60, 40 and 20 percent of your total credit available.
Avoid using your credit cards at all. Pay for everything with cold, hard cash. 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.
Collection Agencies
Dealing with a debt collection agency is one of the most traumatic parts of a financial crisis. 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. Although these letters make collection agencies cease contacting people, they are still expected to pay their debts.
Unfortunately, sometimes you have more debts than you have money to pay them off. To make sure everyone gets a share, spread out your money distribution. Even if you are only making minimum payments, sending along at least a little money will mollify your creditors and prevent them from contacting collection agencies.
Give your creditors a call and negotiate payment plans for bills that you can’t pay in full. If you make the first move and hash out a payment plan sometimes they won’t even report it to credit agencies. This can also make your financial situation easier by letting you pay more on those accounts where you have not been able to set up an alternate plan.
If bad credit is causing your to worry, then these tips are your passport to a better life. This information can assist you in stopping the downward direction of your FICO credit score, and making it head back up.
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