Now you must handle the problems and fix your credit score. The following advice can greatly help you rebuild your negative credit.
Financing a home is not always an easy task, especially when you have less than perfect credit. FHA loans might be a good option to consider in these circumstances, as they are backed by our federal government. 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.
The first step in credit repair is to build a commitment to adhere to it. You can’t just make up a commitment to changing your spending habits. Only buy what you absolutely necessary.
Credit Score
If credit repair is your goal, create a plan and stick with it. However, if you are not prepared to alter bad habits regarding your spending, nothing will ever change. You should only purchase the necessities, and skip the impulse buying. Before you open your wallet ask the questions “do I need this?” and “can I afford this?” If the answer is no to either, put it back on the shelf.
You will be able to buy a mortgage if you maintain a high credit score. Making regular mortgage payments will also help your credit score even more. This will be beneficial when you need to take out a loan.
If you want to fix your credit avoid companies claiming they can remove all of your issues, this is a scam. Negative entries that are otherwise accurate will stay on your record for a minimum of seven years!
If you can’t get a normal card due to low credit score, look into a secured card. Most people are able to get this type of card, but you will have to load it up with a prepaid amount of money, as a guarantee that you can pay any charges that you make. If you open a credit card account, keep charges fairly low, and pay it on time, this will go towards improving your credit score.
Make sure you check out any credit counseling agency you do business with them. While many counselors are reputable and exist to offer real help, there are others who just want your money. Some companies you may find are just people trying to scam you.
Contact your creditors and see if you can get them to lower your overall credit line. Not only will this prevent you from owing more, but it can also imply that you are responsible to those companies and to any future companies.
You can reduce your interest rate by maintaining a high credit score. It will lower your monthly payments, so your debt will be taken care of at a much quicker rate. Obtaining lower interest rates will make it easier for you to manage your credit, which in turn will improve your credit rating.
Some settlement agreements can actually be bad for your credit score, and you should be sure of how it will affect you. Creditors are only trying to get the money that you owe them and could care less how it will affect your score.
Check over your credit card statement each month to make sure there aren’t any discrepancies. If this is the case, act as soon as possible to get the matter resolved before it can affect your credit score.
Having a good record allow you to qualify for things like a home mortgage. If you wish to have an even higher credit score, make sure that you pay your house mortgage off on time. Owning your own home also improves your credit score in the form of having large assets to borrow against. This will be useful in case you need to borrow money.
If you wheel and deal and get a new payment plan, make sure the agreement is committed to paper. Once the debt is fully paid, get a statement that verifies that the debt has been satisfied and send it to the various credit reporting agencies.
Bankruptcy should be a last resort option. This will have damaging consequences to your credit score for around 10 years. It might seem like a good thing but you will be affected down the long run you’re just hurting yourself.
If you can afford to pay another monthly bill, an installment account paid on time will increase your credit rating. You are required to meet a monthly minimum, so be sure that you can make the payments. If these accounts are properly managed, they can provide a quick boost to your credit score.
Try to use credit cards at all. Pay for everything you buy with cash whenever possible. If you do pull out the credit card, but pay it back as soon as possible.
Collection Agencies
Avoid paying off high interest rates so that you don’t pay too much. It is important to know the terms of your original agreement for the debt you incurred. Usually if you agreed to the terms the terms will be upheld as legal. If you believe the charges are excessive and your debtor will not negotiate down the interest and other additional charges, state laws might provide you with additional avenues to pursue a reduction in these charges. Federal law provides that when you are billed by a collection company the fees and interest cannot exceed the amount of the original debt. However, you agreed to pay the interests off when you signed the contract. If you plan on suing your creditors, you may be capable of having the interest rates viewed as being too high.
Debt collection agencies can be the most stressful part of dealing with bad credit. These letters may prevent collection agencies from making phone calls, but they don’t erase liability for the debt itself.
Don’t fall prey to law offices that promise you instant credit score. Because of the surge of credit issues out there, attorneys and scam artists have come up with ways to charge a high price for repair schemes that can be illegal and useless. Do the research on any lawyer before you call them.
No credit repair company can remove factual information, no matter how damaging, from your credit report. Sadly, harmful entries remain on your report for roughly seven years. Incorrect information may be erased though.
Common Sense
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.
Be wary of credit repair scams that can get you in legal trouble. There are plenty of credit scams that purport to erase your existing credit file and create a new one. This tactic is not legal, and you face serious repercussions if you are caught. The criminal charges that you face will be very expensive, and you may also have to serve prison time if found guilty.