Knowing what you owed and to whom it was owed may have prevented you from incurring the debt in the first place. But now it is time to go into damage control mode and repair your credit. The following advice is easy to put into practice, so read it and then put it to use.
Having poor credit makes financing a home a nightmare. FHA loans might be a good option to consider in these circumstances, as they are backed by our federal government. Even if the applicant does not have money for closing costs or a down payment, an FHA loan is workable.
The first step to repairing your ailing credit is to create a manageable, feasible financial plan. Real changes come from commitment to healthy spending habits. Stick to the essentials, and avoid frivolous purchases at all costs. Ask yourself if a certain purchase is both necessary and affordable. Buy the item if your answer to this question is “yes”.
A good credit report means you are more likely to get financing for a home. When your mortgage is paid in full, you will be rewarded with increased scores on your credit file. Owning your own home also improves your credit score in the form of having large assets to borrow against. These benefits will pay off if you need to secure a loan.
Interest Rates
If you do not want to pay too much, contact your creditors and tell them you will not pay on a interest rate that is astronomical. Creditors are skirting a fine line of law when they try to charge you exorbitant interest rates. However, when you signed up for the line of credit you also agreed to pay the interest. If you decide to sue your creditors, you should be able to have the interest rates recognized as too high.
To start fixing your credit, you will have to pay your bills. More importantly, you need to start paying your bills in full and on time. You will notice an improvement in your credit score pretty quickly after paying off some past debts.
Before you decide to go through with a debt settlement, you should be sure you know how it will affect your credit. You should know all about the methods you can use if you are going to enter into an agreement with someone. Most of the time they want their money and don’t care about your credit score.
If you are doing hardcore credit score improvement, you need to scrutinize your report for negative entries. 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.
If you come across a mistake on your credit report, don’t hesitate to dispute it. Include proof along with a letter disputing the claim to the agency that recorded the errors. Always send your dispute letters certified mail, so that you can get return confirmation. This will give you proof that the agency received your dispute paperwork.
Many times you and your creditor can work together to come up with a prepayment plan. If so, be sure you get a written agreement stating the terms. You want documentation to back yourself up so there will be no problems in the future, and if the company owner changes you will have more of a chance of keeping your plan. 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.
Begin the process of credit improvement by trying to pay down your credit card balances as fast as you can. Pay off accounts with the highest interest rates first. Doing so shows your lenders that you are responsible.
Carefully read all of your credit statements. Take a second look to make sure that you are being charged only for what you actually purchased. Take the reigns, and go over your monthly credit card statements. No one else will do it, it is your responsibility.
Avoid using your credit cards at all. Use cash for purchases instead while you are building back your credit. If you do use a credit card, pay the full balance each month.
Collection Agencies
When you are having trouble paying your bills, debt collection agencies will start contacting you demanding payment. You can use a cease and desist letter to stop any harassment from collection agencies. A letter like this may stop a collection agency from harassing you, but you are still on the hook to pay your debts.
You probably noticed that in order to repair your credit score, you really need to use common sense. If you follow some sound advice and use common sense, you can be on your way back to good credit.
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