It can be hard to work with companies in the future if your credit score is low. The longer your low credit score lasts, the more limited your financial choices will be. There are ways, however, that you can fix past mistakes and repair your credit score. Use the tips below for success in repairing your credit.
Financing a home can be difficult if you have bad credit. There is, however, alternative types of funding available that are offered by the banks. FHA and USDA are two such agencies who offer finance to those with lower credit scores, sometimes with low down payment and closing cost clauses. Even if an individual does not have money for the down payment to purchase real estate or pay closing costs, FHA loans may still work.
If your credit history has put you in the position where you are not able to obtain a regular credit card, you should try to get a secured credit card to begin rebuilding your credit. This card will be more than likely be granted to you, however you must fund the account ahead of your purchases as a sort of “insurance” to the bank that your debts will be paid. Using this new credit card in a responsible manner will help to build back up your good credit rating.
Credit Cards
If you have credit cards with a balance that exceeds 50% of your credit limit, you must continue to pay on them until the balance is lower than 50% of the credit limit. When balances are over 50%, your credit rating goes down significantly, so try to either spread out your debt or, ideally, pay off your credit cards.
Good credit scores mean you can easily qualify for a home or car loan. Paying mortgage notes on time will keep your credit scores high. Credit rating companies will judge you a reliable risk when you have verifiable assets such as a home. If the need arrives to obtain a loan for any reason, this will be a valuable asset for you.
Installment Account
Opening an installment account is one way to improve your credit score. All installment accounts must stay above the set monthly minimum, so only open one if you can afford it. Keeping an installment account will help your credit score.
Make sure you thoroughly research into any credit improvement agency or counselor before you do business with them. You will find some counselors that truly want to help you fix your credit situation, while others may have different motives. Some are just people trying to scam you. Be a wise consumer by checking whether or not the credit counselor you are going to deal with is legitimate.
Before you agree on an agreement for settling your debt settlement, you should determine what affect this will have on your credit score. Some debt settlements are better than others. Do your homework and find out how your score will be impacted before agreeing to anything. Some are out there just to take your money; they don’t care about your rating.
Officially dispute any errors you find on your credit reports. Contact the credit agency in writing, with documentation to support the errors that you are disputing. Sending your letter by certified mail provides you with proof that the letter was received.
Do not spend more than you can afford. This takes time and a change in attitude to accomplish. In many cases, people are using credit cards to buy things they want, rather than focusing on things that they need. Review your budget and look at what you can spend each month without using more money than you have coming in.
Do not file for bankruptcy if you do not have to. Bankruptcy will be noted on the credit report for 10 years, afterwards you must rebuild from scratch. Bankruptcy not only zeros out your debt, it also zeros out your credit score. Filing for bankruptcy will make it very difficult for you to qualify for credit in the future.
Improve your credit rating and open up more opportunities for you in the future. You just need to know where to start and what you can do. Repairing your credit takes some discipline and a little time. Make the tips in this article work for you and enjoy your spotless credit.
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