One of the worst effects of a credit problem is the feeling of powerlessness it gives you. If you’ve recently gone through some hard times, a bad credit score is just an ugly reminder of that experience. You can do things to improve credit and here are some good ways.
If you are buying a home it will not always be easy, and even more difficult if your credit is bad. See about getting an FHA loan, which are loans that the federal government guarantees. FHA loans are also great when a borrower doesn’t have the money to make a down payment or pay closing costs.
Secured credit cards are an effective way for you to start rebuilding your credit. With a secured card, you have to fund your account before you use the card so that the bank will be assured that you will pay off your debts. A new credit card, used responsibly, will help repair your credit rating.
Credit Card
If your credit card has a balance of over 50% of your limit, it should be your number one priority to pay it off until the balance is under 50%. Any balances that are over half your limit drag your credit rating down. So be sure to pay your credit card down or, if you can not, try to use another credit card.
Legitimate negative credit problems can not be easily wiped away from your credit rating, so be wary of companies that promise they can do so. Unfortunately, negative marks will stay on your record for seven years. It is possible to have erroneous information removed from your report, however.
Don’t attempt to fix your credit in a way that will result in you breaking any laws. There are many different places that claim they can help you get a new credit profile. This is illegal and you will most certainly get caught. In addition to the possibility of facing jail time, you could be fined, your attorney bills may be substantial, and your reputation could be ruined.
Contact your creditors to request a reduction in your credit line. This will stop you from racking up giant credit card bills, and show lenders you are responsible.
Check any negative items on your reports carefully when you begin fixing your credit. Even though the particular credit item may not accurate, finding an error in the amount, date, or something else can cause the entire item to be stricken from your report.
Joining a credit union is beneficial if you want to make your credit score better but cannot get new credit. Credit unions sometimes have better rates and more options for your credit rather than a large bank. You can base this on how well the economy is in your area instead of the national situation.
If you come across a mistake on your credit report, don’t hesitate to dispute it. Write a dispute letter to any agencies with recorded errors, and include supporting documents. Make sure that you send the letter via recorded delivery, so that you can prove that the credit agency receives it.
Credit Cards
Pay the balances on all credit cards as soon as you can to start the credit improvement process. You should first work on paying down the credit cards with the highest balance or interest rates. This shows creditors you are responsible about your credit cards.
Put your credit cards on lock down and don’t use them at all, if possible. Try to make purchases using cash only. If you absolutely have no other choice but to use a credit card, pay off the balance in full as soon as possible.
One of the most nerve-racking aspects of being in debt, and having bad credit, is dealing with collection agencies. Cease and desist correspondences can be legally used by a consumer to put off collection agencies; however they only help stop the harassing phone calls. These letters may prevent collection agencies from making phone calls, but the consumer remains responsible for paying the debt.
When you create a new credit source, your score decreases. Don’t be tempted to get a new credit card even if it promises you discounts at stores. As soon as you open a new credit account, your credit score drops immediately.
Poor credit can make you feel that your financial situation will never improve. If you follow these tips, you will be well on your way to improving your credit.
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