Having bad credit can create a feeling that you are victimized by your own personal finances. If you’ve recently gone through some hard times, a bad credit score is just an ugly reminder of that experience. There are, however, a few ideas you can use to repair your credit right now. Let’s get started.
If you want to fix your credit, you must first conjure a workable plan that you can stick to. You can’t just make up a plan and not change how you spend your money. Don’t buy anything unless you absolutely need it. When considering a purchase, ask yourself if the purchase is necessary and affordable, if you answer yes to both, you should buy it.
You can get better interest rates on credit cards and loans when you have a good credit score. This can help lower your monthly payments, and help you pay them off quicker. Compare offers and choose the best interest rate you can find when borrowing money or subscribing to a credit card.
Interest Rates
Paying off any debts you have that have high interest rates can help you to avoid paying too much. Creditors are skirting a fine line of law when they try to charge you exorbitant interest rates. However, you have entered into a legal agreement that requires you to pay accrued interest. 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.
One of the first steps of improving your credit score is ensuring that your bills are always paid. You need to pay your bills off on time; this is very important. Getting rid of past-due bills will have a fast and dramatic effect on your credit score.
Credit Counselors
Make sure you thoroughly research into any credit score repair agency or counselor before you do business with them. Although some credit counselors are truthful and legitimately helpful, other credit counselors are not honest and upfront with their motives. Some credit services are nothing more than fly-by-night scams. It is wise for consumers to not give out personal information unless they are absolutely sure that the company is legit.
Do not involve yourself in illegal activities. There are plenty of credit scams that purport to erase your existing credit file and create a new one. It’s illegal to do this and you can get caught easily. The criminal charges that you face will be very expensive, and you may also have to serve prison time if found guilty.
Credit Score
Prior to agreeing to a debt settlement agreement, find out how that process is going to impact your credit score. Some agreements cause less damage to your credit score than others, and each should be considered prior to making an arrangement with a creditor. The creditor does not care what happens to your credit score, as long as they get their money.
Make sure to check all three of your credit reports, and pay extra attention to the negative reports when you are working on repairing bad credit. 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.
Try to pay down all of your debts until you’re only carrying a balance on one. Make the minimum payment each month on your other accounts, but make the largest payment possible to the one account you are focusing on. Doing this will allow you to focus on paying off one large credit card bill, instead of several smaller ones.
If you and a creditor agree on a payment plan, make sure the agreement is committed to paper. Having the plan in writing will protect you if the creditor reneges on the plan or if your debt is transferred to another creditor. Once the debt is fully paid, you need to get a statement verifying this from the creditor and send it to each of the major credit bureaus.
If at all possible, avoid filing bankruptcy. Bankruptcies appear on credit reports for ten years. Although it sounds like an easy way to get rid of debt, it will affect your life for a significant amount of time. Bankruptcy destroys your ability to get any sort of loan for at least a few years, so don’t file unless you have to.
To keep your credit in good standing and get a better score, maintain a low balance on revolving accounts. Your credit score can go up if you just bring your balances down. Increments of twenty of available credit are noted by fico.
You should locate a good credit improvement company to help you. There are plenty of credit repair agencies that don’t follow through with their promises. Some people have turned over all of their financial information to people who turned out to be scam artists, and they wound up in worse shape than before they started. 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.
Collection Agencies
One of the most nerve-racking aspects of being in debt, and having bad credit, is dealing with collection agencies. Consumers can legally issue letters to collection agencies to cease and desist if they are being harassed. These letters will discourage contact from collection agencies. You may be able to stop the deluge of calls from a collection agency, but the debt must still be dealt with.
Poor credit can make you feel that your financial situation will never improve. If you use these tips, you can change your attitude about your finances and improve your credit score.
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