Bad credit can affect your self-esteem in a negative way. Low credit scores can bring to mind memories of hard times in your life and past mistakes which were made, and these reminders can hinder your progress in moving ahead in life. Don’t despair, there are ways you can repair your credit.
Getting a traditional home loan can be difficult, if not impossible, with imperfect credit. If your income is a factor you may qualify for a FHA loan, which has lower standards and makes the federal government your lender in a sense. Some FHA loans even cover a down payment or your closing costs.
The first thing you should do when trying to improve your credit is develop an effective plan and make a commitment to adhere to it. Making changes to become a wise spender means you have to make a budget and rules, then follow them. Sticking to necessities for a while is crucial. You should only make a purchase if it is necessary and it fits in your budget.
Interest Charges
If your debt includes large amounts for interest charges contact the debt collector and see whether you can pay the original debt and avoid some of the additional interest charges. If you are being charged a distressingly high interest rate, you may be able to talk to your creditor. Although, in reality, you did agree in advance to pay any interest charges incurred. If you decide to sue your creditors, you should be able to have the interest rates recognized as too high.
If you are looking to repair your credit, then you should not believe a company if they promise they can remove negative information from the report. Specifically if this information is correct. These bad marks stay on your record for seven years or more. You should know that mistakes and anything incorrect can be removed from your credit report.
Always do research before contracting a credit counselor. There are some legit counselors, and there are some that have ulterior motives. Others are just plain fraudulent. It is wise for consumers to not give out personal information unless they are absolutely sure that the company is legit.
Do not do anything that will make you end up in jail. Don’t buy into scams that suggest you create new credit files. Creating a new credit file is very illegal and you can be easily caught. The legal proceedings will be costly, and you may even be sent to jail.
Give your credit card company a call and ask them to lower your credit limit. Doing this keeps you from overtaxing yourself. It also shows the lending company that you are responsible.
Joining a credit union can give you opportunities to increase your credit score. Credit unions focus more on the local situation instead of the national one, and may provide more options or rates that are more favorable than those of a larger bank.
Find and challenge errors on your credit report using the dispute process offered by each credit reporting agency. Create a dispute letter for agencies that have the error, and submit additional supporting documents along with it. Make sure that you send the letter via recorded delivery, so that you can prove that the credit agency receives it.
Credit Card
It is crucial that you review credit card bills on a monthly basis to check for errors. If you notice unwarranted fees or surcharges, contact the credit card company to avoid being reported for failure to pay.
Make sure you will get a plan in writing if you decide a payment plan is the best option for you with your creditor. Having documentation is important for your records but also protects you in case a creditor changes their mind. After you have paid your debt, request appropriate documentation that confirms your zero balance.
Filing for bankruptcy is a bad idea. The record of the bankruptcy appears on your report and affects your credit rating for up to 10 years. It might seem like a good thing but you will be affected down the line. It may be impossible for you to get a loan or credit card in the future if you file for bankruptcy.
If credit score repair is something you have been considering, the first step would be to pay down your credit card balances. Pay down the cards with the largest balances and interest rates first. By doing this, you will show your creditors that you are trustworthy with your credit.
Making your payments on time shows lenders that you are serious about maintaining good credit. Anytime you don’t make a payment on time it can damage your credit and it can be hard to get a loan anywhere.
Poor credit can make you feel that your financial situation will never improve. If you follow these tips, you will be well on your way to improving your credit.
