It doesn’t matter whether you fell victim to people giving out free credit cards, spent too much money or was hit very hard with the recession. Chances are that your credit has been damaged. You can reverse the effects of these actions though.
Financing homes can be made more difficult when your credit score is low. See about getting an FHA loan, which are loans that the federal government guarantees. FHA loans are great for the individuals that do not have the financial capability to make down payments.
Secured Credit Card
If your credit history has put you in the position where you are not able to obtain a regular credit card, you should try to get a secured credit card to begin rebuilding your credit. When you open a secured credit card account, you place money on deposit to cover any charges you may make. This ensures in advance that you will have enough money to pay for your debt. Using this card responsibly will improve your credit rating over time, and eventually you’ll be able to get a normal credit card again.
Getting an installment account can help you earn money and provide a boost to your credit. All installment accounts must stay above the set monthly minimum, so only open one if you can afford it. Your FICO score will rise over time, if you responsibly manage this type of account.
Before consulting a credit counseling agency, be sure to check out their background and history. There are some counselors that are real, while others are basically scammers. Also be aware that there are other credit counseling services run by dishonest people. These services are scams and should be avoided at any cost. To help protect yourself from fraud, investigate any credit counselors. One way to check an agency out is to check with the Better Business Bureau.
Though it is an unsettling prospect, consider asking your credit card provider to reduce the amount of credit extended to you. 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.
Learn what affect a debt settlement plan will have on your credit rating before you sign up. You should know all about the methods you can use if you are going to enter into an agreement with someone. Creditors just want their money and really aren’t interested on how it will affect your score.
You should look over all negative reports thoroughly when attempting to fix your credit. If you notice a mistake on your report, you could get some items crossed off. Even if the item itself is right, an error in the date or amount gives you the right to contest it.
If you find any errors on your credit report, you should dispute them. Gather all supporting documents and any errors you find, and send them with a letter to the credit reporting agencies. Mail your dispute documents to the agency using certified mail and a return receipt so that you can prove the agency received them.
Credit Card Accounts
In order to start repairing your credit, you should close all but one of your credit card accounts. You can make arrangements to pay the balances, or transfer the balances of your closed credit card accounts to your single remaining credit card. It is much easier to manage one large monthly payment than it is to keep track of multiple smaller ones.
Do not file for bankruptcy. Bankruptcy does not drop from your credit report until ten years have passed, so you will deal with the fallout for a significant period of time. It might seem like a good thing but you will be affected down the line. Filing for bankruptcy will make it very difficult for you to qualify for credit in the future.
Make sure to fully read every single credit card statement that you get. Make sure the charges on your credit cards are accurate. The responsibility lies with you to verify that each charge is accurate.
For a better credit rating, lower the balances on your revolving accounts. Reducing the amount of debt you’re carrying is one of the best ways to improve your credit score. The FICO system notates when a balance on a card is at 20,40,60,80, and 100 percent of the total available credit.
Your credit cards are not doing you any favors; avoid using them. Pay for everything with cold, hard cash. If you absolutely have no other choice but to use a credit card, pay off the balance in full as soon as possible.
If you have a lot of debt that you cannot pay, it can create a mess. Take the money you have for bills, and allocate a small amount to several creditors so you can make a little progress with each. Even if the payments you are making are the minimum ones, these small payments will still somewhat please your creditors, which will likely stop them from getting in touch with collection agencies.
Good credit starts with rebuilding. Prepaid credit cards can help you demonstrate responsible use of credit without having to worry about missing payments or late fees. Doing this shows lenders that you can be trusted with credit.
Each time you get a new credit card can negatively effect your credit score. If you want to keep your credit score high, you need to resist the urge to open new accounts. Your good credit score will suffer a small dip each time you open a new account.
Although it can seem daunting, you can get your credit on the mend by learning about it and taking the proper steps. With the tips above, you are better prepared to take action and get your credit situation back where it should be.