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. The good news is there are many ways to improve your credit. Get started today with these tips.
Financing a home is not always an easy task, especially when you have less than perfect credit. There is, however, alternative types of funding available that are offered by the banks. FHA and USDA are two such agencies who offer finance to those with lower credit scores, sometimes with low down payment and closing cost clauses. You may even be able to secure your down payment and closing costs through an FHA loan. It depends on if you qualify.
Installment Account
If you can afford to pay another monthly bill, an installment account paid on time will increase your credit rating. You are required to meet a monthly minimum, so be sure that you can make the payments. Keeping an installment account will help your credit score.
Avoid paying off high interest rates so that you don't pay too much. In most cases, creditors are somewhat limited in the amount of interest they can charge. Remember that you agreed to pay that interest when you signed the contract. If you're going to try taking your creditors to court, make sure you can prove the interest rates they charged were excessively high.
One thing to watch out for when trying to fix your credit is scammers who say that they can get any negative information deleted from your credit, regardless of its accuracy. You have to wait for seven years before negative data can come off your record. Know, however, that it is possible to delete information that is actually wrong.
Always do research before contracting a credit counselor. 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. A savvy consumer will always do his or her research on any credit counseling service to ensure that the agency is legitimate.
Put the spending brakes on yourself by lowering your credit limit on all of your cards. It will pay off in lowering the risk of excessive borrowing and reflecting good financial decision making on your behalf.
If you see any erroneous information on your credit report, file a dispute so you can have the information removed. You should contact the credit bureaus both online and by certified letter; be sure to include proof of your claims. Send any correspondence by recorded mail to ensure proof of receipt by the agency.
Don't spend more than you make. You may have to overhaul your entire mindset when it comes to money. For a while, the easy availability of credit encouraged people to buy more than they could afford. We now must pay for that. Be realistic about the lifestyle your income affords you.
Close all your credit cards except for one as a means of repairing your credit. Transfer your balances to this one card, with the lowest interest, if this is possible. Instead of paying several smaller credit card bills, you can work to pay off one credit card.
Credit Cards
Make sure that you pay more than the minimum balance owed on all of your credit cards to improve your credit. Pay down credit cards that have the highest amount owed, or the highest interest rates. By doing this, you will show your creditors that you are trustworthy with your credit.
When you pay your bills on time, you are keeping your credit score high. Each time you make your payment late it will go against you.
Collection Agencies
Debt collection agencies are the most difficult part in having bad credit. Consumers can try to use a cease and desist letter if an agency is harassing them, but their usefulness is limited. Although these letters make collection agencies cease contacting people, they are still expected to pay their debts.
Do not trust anyone who promises you miracle results. Since there so many people struggling with their credit today, there are a lot of businesses that have popped up to take advantage of the situation. Get reviews on a lawyer before you go to them for help.
Having a lot of debts that you cannot pay is part of having bad credit sometimes. You should spread out the money you do have to spend so that all of your creditors get a share. Even if you can only meet the minimum payment, you will avoid having the bill sent to collections.
If you want to find an alternative way to pay, you should get a hold of them directly. If you make the first move and hash out a payment plan sometimes they won't even report it to credit agencies. This can help ease some of the financial strain that you have, which will let you put your focus on the accounts where a different repayment plan isn't possible.
Pay down your debt. Lenders are interested in how much money you owe compared to how much you make. Having a significant amount of debt compared to your income means that many lenders will view you as a credit risk. You are not likely to be able to pay off the debt in full right away, so you should make a plan to repay in a timely fashion and follow that schedule.
Having a poor credit score can make you have negative feelings about your finances. If you work on getting your credit repaired, you will feel much better.