Having a poor credit score is among the most frustrating situations that takes the fun out of life. A low score will close the doors on many financial options and stop you from being able to make your own choices in life. There are a few things you can do to improve and protect your credit.
If you want to fix your credit, you must first conjure a workable plan that you can stick to. Make a commitment to making better financial decisions. Don’t buy anything unless you absolutely need it. If you are buying something because you want it, and don’t need it, put it back on the shelf.
If you have a card that carries a balance of over 50% of the limit, you should pay it down to below 50%. Your credit score can diminish with balances over 50%, so spread out the debt or pay off the credit cards.
Good credit scores allow you to take out loans, buy a house, and make other large purchases. Staying current with your mortgage payments is a way to raise your credit score even more. Owning your own home also improves your credit score in the form of having large assets to borrow against. Financial stability is important should you need a loan.
In order to make sure that you do not overpay, know that you can dispute your really high interest rates. 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. Keep in mind that you did sign a contract agreeing that interest rates were acceptable. 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.
You won’t be able to repair your credit until you are able to pay those bills. Your bills must be paid completely and on time. Your credit score will increase if you are consistently paying back your debts.
If an action can result in imprisonment, draw the line. There are schemes online that will show you how to establish an additional credit file. This is illegal and you will most certainly get caught. Think of the legal costs and the possibility of doing hard time.
Read your negative reports carefully when attempting to rebuild your credit. Although a certain credit item may not have any error, finding a mistake corresponding to a date or an amount can have the same item taken out of your report.
If you are trying to improve your credit score but are having difficulty gaining access to new credit in order to do so, join a credit union. With help from a credit union you might get better rates than at another bank, since credit unions better understand the current area compared to the national situation.
Start living within your means. You need to change your thinking to consider your future goals, not just buy all of the things you want right now. Getting credit has never been easier, making it just as easy for people to buy items they simply can’t afford. This, though, comes with a hefty interest price tag. Be honest with yourself about what you can truly afford.
Credit Card Balances
To fix damaged credit, pay off your credit card balances as fast as you can. First, pay down your credit card balances, starting with the highest interest. This shows creditors you are responsible about your credit cards.
To earn a higher credit score, keep revolving account balances low. Just lowering your balances can raise your credit score. The FICO system will make a note when the balances are at 20, 40, 60, 80 and 100 percent of the total credit available.
Building your credit back up is the number one way to fix a bad credit score. Prepaid credit cards are great for this, since you can get improved with a bad credit score, and there’s no way to rack up debt and late fees. You will prove to creditors that you can pay your bills.
Threats are illegal. If a collection agency is treating you roughly, you could sue them. You do not have to deal with it; there are many laws that will protect you.
If you are having trouble creating a budget, or difficulty abiding by one, reach out to a credit counseling organization. Agents at these organizations can negotiate with creditors to set up payment plans for your debt, and they will teach you how to dig out and stay out of debt over time. A credit counselor can give you the best advice on how to be in control of your finances, and pay off your debts.
Contact your creditors directly to work out alternate payment plans if you are having difficulty making your monthly payments. Frequently, if you contact your creditor, it may consider your needs and develop a payment plan without reporting to credit bureaus. 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.
Easy tips, like the ones in this article, will help you repair your credit and keep it healthy in the future. Educating yourself about credit and how it works is an important investment that will pay off in the future.