Whether you got your credit cards on your college campus, went shopping too many times or suffered from the bad economy, you’ve probably damaged your credit. Don’t despair, because there are ways to get things back on track.
Credit Card
A secured credit card might be a good option for the person with a poor credit score. Most likely, you will not have a problem obtaining this type of card, but you must add funds to the account before you make any purchases to assure the bank that you will pay. Using this new credit card in a responsible manner will help to build back up your good credit rating.
If your credit card is carrying more than half of its credit limit, your first priority should be paying it down until it is below 50%. If you owe more than half of your credit limit on any credit card, this will have a negative impact on your rating. Plan to pay down that card as soon as possible, or see about transferring some of that debt.
Credit Score
Your interest rate will be lower if you have a good credit score. Lower interest rates mean lower payments, which allows you to pay off debt faster. Receiving competitive credit rates and good offers are important in having credit that you can pay off easily, and that will get you a great credit score.
Getting a reduced interest rate is the easiest way to reduce your overall debt. There are laws that protect you from creditors that charge exorbitant interest rates. You did sign a contract saying that you would pay off the debt. Should you sue any creditors, it is important to push the fact that the interest rates are outrageously high.
If you want to fix your credit avoid companies claiming they can remove all of your issues, even those properly reported. Unfortunately, this negative information stays on your credit record for at least seven years. Be aware, however, that incorrect information can indeed be erased from your record.
Debt Settlement
Don’t sign a debt settlement contract until you know what impact it is going to have on your credit score. Certain methods of settling your debts have less detrimental effects on your credit history. Some debt settlement companies are only after profits and do not communicate the likely consequences of their methods.
Dispute any errors that are on your credit report so they are removed. Send an official letter to companies that have wrongfully lowered your score, and include documentation that shows the mistake. When you mail your dispute package, be sure to make arrangements for confirmation of receipt. In this way, you will have documentation that your information has been received.
If you are living beyond your financial ability, stop now. You need to change your way of thinking in this regard. 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. Take a realistic look at your financial situation and determine how much you can actually spend.
Look through your credit card statement each month and make sure that it is correct. You don’t want them reporting these to the credit reporting companies, so you’ll need to contact them immediately if there are.
Do not carry high balances on any of your credit accounts. Your credit score can be raised if you lower your balances. The FICO system makes a note to your credit report every time your account balance reaches a new 20% increment of your total available credit.
There are many credit improvement agencies advertised; you must check with places like the Better Business Bureau to make sure that you deal with a reputable one. The credit score improvement industry does have its fair share of agencies that do not live up to their promises. Lots of people get taken in by scammers. See if the company in question has a reputation on any of the user review sites before you commence business with them.
Credit Repair
Be careful of paying for a service or a lawyer that advertises quick or instant credit repair, many of them are dishonest. Less ethical lawyers have realized that with the current glut of consumers with credit trouble, there is money to be made by charging high fees for ineffective credit repair help. Investigate a lawyer before hiring them to help you in repairing your credit.
It can seem impossible to repair your credit score, but just knowing what the steps are and making a plan can make it seem much less intimidating. Put the information you just learned into practice and start repairing your credit today.
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