Having poor credit can be a serious hindrance to moving forward with your life. It can rob you of your financial options and prevent you from taking advantage of great opportunities. That said, it is possible to restore your credit to its former glory and prevent it from being wrecked again.
An imperfect credit rating can make financing a home even more difficult than normal. If this is the case, you can apply for a loan through the Federal Housing Administration (FHA). The credit requirements for these loans are more lenient than those of conventional lenders, and the federal government also guarantees the loans. FHA loans are a good option regardless of your down payment amount or funds available for closing costs.
Any credit cards that have balances over 50% of your limit should be paid off until they are less than 50% of your limit. Your credit score can diminish with balances over 50%, so spread out the debt or pay off the credit cards.
Credit Score
If you credit score is good, you should have no problem purchasing a house and obtaining a mortgage. Making your mortgage payment on time each month will also boost your credit score. Credit rating companies will judge you a reliable risk when you have verifiable assets such as a home. A good credit score is necessary when you need to take out a loan.
Paying off any debts you have that have high interest rates can help you to avoid paying too much. There are laws that protect you from creditors that charge exorbitant interest rates. However, when you signed up for the line of credit you also agreed to pay the interest. Should you sue any creditors, it is important to push the fact that the interest rates are outrageously high.
One thing to watch out for when trying to fix your credit is scammers who say that they can get any negative information deleted from your credit, regardless of its accuracy. Negative credit information remains on your record for up to seven years. If there is incorrect, negative information, you can get it removed.
In order to start repairing your credit, you need to start paying your bills. To help your credit, you should be paying the full amount owed within the time allowed. You will notice how quickly your credit score increases when you start paying off those overdue bills.
Make sure you thoroughly research into any credit score repair agency or counselor before you do business with them. The industry is rife with fraud and people with ulterior motives, so finding a legitimate credit counselor can be challenging. Other counselors are nothing more than scam artists. To help protect yourself from fraud, investigate any credit counselors. One way to check an agency out is to check with the Better Business Bureau.
Do not involve yourself in illegal activities. As we speak, people are trying to take advantage of illegal practices to have people create credit files that can get them into trouble. This is illegal and you will eventually be caught. The legal costs can cripple you, and there is a very good chance you will be sent to jail.
If you wheel and deal and get a new payment plan, be certain to have it on paper. If there is a change of heart, this paper will protect you. 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.
Credit Card Balances
If you need to repair your credit score, you should pay your credit card balances as fast as possible. Pay off accounts with the highest interest rates first. Beginning to pay your credit card balances off will show creditors that you are making a valiant effort and are credit worthy.
Lenders won’t bother to look at those statements and therefor they are a waste of your time. It can actually backfire. It brings attention to a part of your report you would rather a lender not look at very closely.
Debt collection agencies are the most difficult part in having bad credit. The consumer can use cease and desist orders, but these only stop harassment. These letters stop collection agencies that harassing debtors, but they don’t erase liability for the debt itself.
Any time that you take out a line of credit it is going to negatively impact your credit score. As tempting as it can be, do not a new credit card. As soon as you open your new credit card, your credit score will drop.
Create a plan in order to pay back your debts. Until your debts are paid off, they will still appear on your report, but current payments will reduce their negative impact.
Wipe out your debt. When you apply for a loan, they take into consideration the ratio of your debt and your income. If you have too much debt for your income, you are viewed as a poor credit risk. While you may not be able to pay a lot at first, just taking the initiative to get your debts current looks good on your credit report.
Never pay your bills late. Timely payments have an important impact on your credit score. If you create payment reminders, you’ll avoid pesky late fees. There are a number of methods you can use to accomplish this. Set them up with your online banking portal, to be sent as emails to yourself, or have debtors text you a payment reminder.
If you apply these tips, you should be able to improve your credit and maintain a good score. Good credit is important, so it’s important that you learn a great deal about credit score repair.
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