The results of a poor credit score are traumatic to deal with. It is really bad if you have made bad choices in your past and they are still affecting you now. It may not be the easiest thing you’ll do, but it is possible to clean up your credit. Get ready to rebuild your credit with the following proven tips.
If you are buying a home it will not always be easy, and even more difficult if your credit is bad. If this is the case, try to get an FHA loan, which are loans backed by federal government. It might be possible to get an FHA loan even if you don’t have the money for a down payment or the closing costs involved.
You may be able to get a secured credit card even if your poor credit has prevented you from getting other credit cards. These types of credit cards often require a good faith deposit to open a new account. Limited spending and regular payments can turn a new credit account into a valuable credit improvement tool.
Pay down the balance on any credit card that is 50% or more 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.
By maintaining a good credit score, you can decrease your interest rate. It will lower your monthly payments, so your debt will be taken care of at a much quicker rate. Paying your outstanding balances on time is the best way to keep your credit in check, and to obtain lower interest rates.
When you have a good credit rating, you will be able to easily get a mortgage loan. You will get a better credit score by paying your mortgage payment on time. The more equity you have in your home, the more stability the banks see in you. This will be very helpful if the time comes where you need to take out a loan.
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. 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. Keep in mind that you did sign a contract agreeing that interest rates were acceptable. It is likely you can have exorbitant interest rates reduced if you sue the creditor.
The first step to repairing your credit is paying what you owe. More specifically, pay them on time and in full. Your FICO score will begin to increase immediately after you pay the bills that are past due.
If an action can result in imprisonment, draw the line. Don’t buy into scams that suggest you create new credit files. Do not attempt this because it’s illegal; you will not be able to avoid getting caught. They may seem like a small matter, but if you get caught, you could receive heavy fines and even jail time.
Contact your creditors to request a reduction in your credit line. This is likely to keep you from overusing credit, which can be a financial burden. It also lets credit card companies know that you are responsible, and this makes them more likely to extend credit to you as time goes on.
Don’t spend more than you make each month. You need to change your way of thinking in this regard. Many people have acquired debts they can’t pay off, which has affected the amount others will pay to have credit. Take a realistic look at your financial situation and determine how much you can actually spend.
A first step in fixing your credit is to close all credit card accounts that are unnecessary. Aim to only have one account. Transfer your balances to this one card, with the lowest interest, if this is possible. By doing this, you can concentrate on a single credit card payment, as opposed to a lot of smaller ones each month.
It is crucial that you review credit card bills on a monthly basis to check for errors. If there are late fees, you have to make sure that you take care of them immediately with the company so that they don’t send that information to the credit bureaus.
Do not file for bankruptcy. Doing so will reflect upon your credit score and report for 10 years. It may seem like the right things to do, but your future will be affected. Once you have filed for bankruptcy, it may become very difficult to secure a loan or open a new credit account.
Using this advice, you can build your credit to the score you want. Being consistent in the process and honoring your obligations are the most important things to remember. It is possible to make your credit better, so don’t delay and get to it!