Having poor credit can be a devastating occurrence in 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. You can repair it though, and make steps to prevent it from spiraling down further.
If your credit is not perfect, getting a mortgage can be tricky. If you do have poor credit, try to get a FHA loan because there is a guarantee that it will be given to you. FHA loans can even work when someone lacks the funds for down payment or closing costs.
Credit Card
If you need a credit card to aid in fixing your credit but you cannot obtain one due to the state of your credit, applying for a secured credit card is an option. These accounts are much easier to get as you will have to fund the new account ahead of time with a deposit to cover any purchases. By using a new card responsibly, your credit rating will start to increase.
If you have a card that carries a balance of over 50% of the limit, you should pay it down to 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.
When you have better credit, you will be offered lower interest rates on loans and credit cards. This can help lower your monthly payments, and help you pay them off quicker. Obtaining the best possible interest rate saves you money, and helps you maintain your credit score.
Credit Report
When looking to improve your credit, avoid companies claiming that they can remove negative information if the debt is true. All information remains on your credit report for a period of seven years or more. You should know that mistakes and anything incorrect can be removed from your credit report.
Do not do anything that will make you end up in jail. There are various online scams that involve creating a fresh credit file. You will be prosecuted, it is against the law. The legal costs can cripple you, and there is a very good chance you will be sent to jail.
Contact your creditors and see if you can get them to lower your overall credit limit. By doing this it will stabilize you in your financial boundaries instead of letting you extend beyond what you really should.
If you find any errors on your credit report, you should dispute them. You should contact the credit bureaus both online and by certified letter; be sure to include proof of your claims. 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.
Too many credit cards is a common cause of financial strain, so close all of your accounts aside from one. Try to make a payment or transfer your balance to your open credit account. In this manner, you can take care of all your credit card debt by paying down a single balance.
Look through your credit card statement each month and make sure that it is correct. Should there be any mistakes, contact the company and talk to them to avoid being reported to the credit companies.
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 you make the final payment, get a statement that verifies that the debt has been satisfied and send it to the various credit reporting agencies.
These tips can help you repair your credit and keep it high. A good credit score is essential to financial freedom, take the time to learn about fixing your credit.
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