There are many ways that an imperfect credit score can affect your life. Poor financial decisions from years ago can continue to influence your financial well-being in the present. Rebuilding credit may be challenging, but it is not impossible. Read this article for some strategies that can help.
Having poor credit makes financing a home a nightmare. Try to secure an FHA loan; these are federal government guaranteed. You might be able to get an FHA loan even if you cannot afford closing costs or down payments.
Planning is the first step to repairing your credit. You can’t just make up a plan and not change how you spend your money. Pay cash for things, and cut out unnecessary expenses. Ask yourself how necessary each purchase is, and how affordable it is too. If you can’t answer “yes” to each of the questions above, you need to reconsider the purchase.
Credit Card
If you are unable to get an unsecured credit card due to your low credit rating, consider a secured card to help reestablish your rating. Most likely, you will not have a problem obtaining this type of card, but you must add funds to the account before you make any purchases to assure the bank that you will pay. A responsibly used new credit card will begin healing your credit score.
Never trust a business or person who offers to clear up your credit for a price. Especially if it is correct information they say they can remove. These things are, generally, on your record for seven years. It is possible to have erroneous information removed from your report, however.
A good tip is to work with the credit card company when you are in the process of repairing your credit. Talking to them will help keep you from drowning further in debt and making your credit worse. Talk to the company and see if you can change your due date or monthly fees.
Joining a credit union can give you opportunities to increase your credit score. Credit unions sometimes have better rates and more options for your credit rather than a large bank. You can base this on how well the economy is in your area instead of the national situation.
It will be easier to increase your credit rating if you only have one open credit card account. Make the minimum payment each month on your other accounts, but make the largest payment possible to the one account you are focusing on. This will let you focus on paying off a single account rather than many small ones.
Look through your credit card statement each month and make sure that it is correct. Contact the credit card company right away if there are incorrect fees, so that they won’t be on your credit report.
Credit Score
To earn a higher credit score, keep revolving account balances low. By lowering your credit card balances, you will be able to improve 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.
If you go with a repair company to improve your credit score, be sure it is legitimate. There are a number of shady operators in the credit score repair business that can cost you money and do nothing for you. There are many people who have been the victim of a credit score repair scam. Be a smart consumer and educate yourself by researching user reviews online to find a good agency.
Avoid using your credit cards. Pay for everything with cold, hard cash. Pay off any credit card purchases immediately.
Collection Agencies
When you are having trouble paying your bills, debt collection agencies will start contacting you demanding payment. Debtors can stop harassment by collection agencies with cease and desist notices, but know that this is all they do. These letters may prevent collection agencies from making phone calls, but the consumer remains responsible for paying the debt.
If you are trying to fix your credit, be aware of lawyers who claim to instantly fix your credit. Less ethical lawyers have realized that with the current glut of consumers with credit trouble, there is money to be made by charging high fees for ineffective credit restoration help. Check the reviews and reputation of any lawyer or credit score repair firm thoroughly before you contact them and certainly before you give them any money.
If you follow the tips in this article, you will see positive results in building your credit score back up. The main key is to commit to your plan of action and not allow your liabilities slip by. Start working at rebuilding your credit!
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