Bad credit is one of the most irritating potential detours you can encounter on your journey through life. A bad credit report closes doors to financial options and opportunities. There are a few things you can do to improve and protect your credit.
For some it may hard to finance their home due to having less than ideal credit. If this is the case, you can apply for a loan through the Federal Housing Administration (FHA). The credit requirements for these loans are more lenient than those of conventional lenders, and the federal government also guarantees the loans. You might be able to get an FHA loan even if you cannot afford closing costs or down payments.
Interest Rate
You can get better interest rates on credit cards and loans when you have a good credit score. A lower interest rate means lower monthly payments, and less time paying off your debt. Obtaining the best possible interest rate saves you money, and helps you maintain your credit score.
Getting an installment account can help you earn money and provide a boost to your credit. You are required to meet a monthly minimum, so be sure that you can make the payments. If you are able to keep up with one of the accounts, you should see your credit score improving quickly.
Paying your bills is something you need to do to repair your credit. More precisely, you must begin paying your bills fully and on time. You will notice an improvement in your credit score pretty quickly after paying off some past debts.
Before you choose a credit counseling agency, find out more about them. While there are lots of counselors with your best interest at heart, there are others who just want your money. Others are just plain fraudulent. Before you conduct any business with a credit counselor, check into their legitimacy.
Don’t risk prison. There are plenty of credit scams that purport to erase your existing credit file and create a new one. These scams are not legal and there will be repercussions. The end result of getting caught during the crime could be expensive legal fees and a possibility of time behind bars.
Find out how the process will affect your credit rating before you agree to any debt settlement agreements. Certain methods of settling your debts have less detrimental effects on your credit history. Remember creditors want their money. They really don’t care about your credit scores. That is up to you to protect.
Joining a credit union can give you opportunities to increase your credit score. Credit unions may be able to offer more credit options or better rates than a larger bank, based on an understanding of the local area rather than the national situation.
If you see errors on your credit reports, dispute them with the credit agency. Draft a dispute letter that will go to each credit rating agency that shows an error, and prepare any supporting documents. Mail your dispute packet with receipt confirmation so you will have proof the agency has received it.
Live within your means. You you need to rewire your thought process. For a while, the easy availability of credit encouraged people to buy more than they could afford. We now must pay for that. Take a deep look at your finances, and determine what you can realistically afford to spend.
Credit Card
A first step in fixing your credit is to close all credit card accounts that are unnecessary. Aim to only have one account. Try to make a payment or transfer your balance to your open credit account. This allows you to pay off one credit card bill rather than many smaller ones.
Any time you establish any payment plan with any creditor, make sure you get it in writing. Having documentation is important for your records but also protects you in case a creditor changes their mind. If you manage to pay off your debt, make sure you receive proper documentation as proof to send to credit reporting agencies.
Do not file for bankruptcy. The record of the bankruptcy appears on your report and affects your credit rating for up to 10 years. While ridding yourself of most debt may seem ideal, it is not without consequences. If you do file for bankruptcy, it will be extremely difficult to get approved for a loan or a credit card for many years, if ever.
If you apply these tips, you should be able to improve your credit and maintain a good score. Educating yourself about credit and how it works is an important investment that will pay off in the future.
