Bad credit hurts you in nearly all your financial dealings, especially those that involve extending credit to you. Low credit scores keep you limited in terms of obtaining credit now and also in the future. However, there is hope — you can repair your credit with a few steps and re-open those doors to access lower borrowing rates and other benefits once more. Follow the tips and information below to get started cleaning up your credit.
Getting home financing is no small feat, especially if your credit score is less than perfect. You should consider getting a FHA loan they are backed by the government. You might be able to get an FHA loan even if you cannot afford closing costs or down payments.
Having a lower credit score can lower your interest rate. Doing this can reduce monthly payments, which will assist you in paying off any outstanding debts faster. Getting better interest rates leads to an easily maintainable good credit score.
A good credit report means you are more likely to get financing for a home. Making regular mortgage payments will also help your credit score. Owning a home gives you secure financial assets. This will be very helpful if the time comes where you need to take out a loan.
Opening an installment account is one way to improve your credit score. With this sort of an account, you need to keep a minimum. A properly managed installment account will work wonders on your credit rating.
If you don’t want to pay too much at a time, you can avoid paying higher interest rates than you started with. An interest rate that is shockingly high can possibly be ruled as illegal in certain cases. However, when you signed up for the line of credit you also agreed to pay the interest. You need to be able to prove the interest rates are too high if you want to sue your lenders.
Avoid credit schemes that will get you in trouble. Sites may act like you can create new credit lines and tell you how to do it. Needless to say, this is against the law and you are likely to get caught. Legal ramifications can cost a lot, and you may go to jail.
If you notice credit reporting errors, always file a dispute. Compose a letter of dispute to every agency that reported errors, and include as much documentation as you can. Always send your dispute letters certified mail, so that you can get return confirmation. This will give you proof that the agency received your dispute paperwork.
If you wish to repair your credit, you’ll have to stop spending more than you earn. If you’ve been living outside your means, then get ready for a reality check. While you may see your peers racking up credit debt, be sure to not fall into the same trap. Examine your budget, and figure out how much extra money you have to shop with.
If you are having problems retaining control of your charge habits, close all old accounts except for one. You may be able to transfer balances to your remaining account. By doing this, you can concentrate on a single credit card payment, as opposed to a lot of smaller ones each month.
Look through your credit card statement each month and make sure that it is correct. If you spot any late fees, immediately contact your credit card company. This can save you from having late payments reported to the credit reporting agencies.
Many times you and your creditor can work together to come up with a prepayment plan. If so, be sure you get a written agreement stating the terms. This is a great way to have documentation of the plan if the creditor changes their mind or the company ownership gets changed. Once you make the final payment, get a statement that verifies that the debt has been satisfied and send it to the various credit reporting agencies.
If at all possible, avoid filing bankruptcy. Bankruptcies appear on credit reports for ten years. Though it may seem necessary at the time, you should weigh the costs over the next ten years before you decide to go through with the filing. If you choose to file bankruptcy, you’ll be unable to get a credit card or loan in the future.
Carefully read the small print on your statements. Really analyze the purchases on your card to make sure you are not receiving any errant charges for items you never purchased. It’s up to you to make sure that every item on your bill is correct and dispute those that are not.
Do not carry high balances on any of your credit accounts. Just lowering your balances can raise your credit score. The FICO system has a new level for every twenty percentage points of your credit available.
If you fix your credit you can make your life more positive. You just need to know where to start and what you can do. Repairing your credit takes some discipline and a little time. Use the tips here to get your financial life back on track and your credit repaired.