There are many reasons why you may have a poor credit history. Credit cards could have been your primary means of support while you were gaining an education, a passion for shopping may have gotten the best of you or the decline in the economy might have left you jobless for a time. Fortunately, there are actions you can partake to reverse this.
If you have a poor credit rating, it can be extremely difficult to obtain a mortgage loan for a home. FHA loans are good options in these circumstances, because the federal government guarantees them. FHA loans are a good option regardless of your down payment amount or funds available for closing costs.
If credit restoration is your goal, create a plan and stick with it. Make a commitment to making better financial decisions. Don’t buy the things that aren’t needs. Ask yourself whether every purchase is both affordable and necessary, and only buy if the answer to both questions is “yes”.
If you have credit that is not high enough for you to obtain a new credit line, sign up for a secured card. Most likely, a secured credit card will be easy for you to get, but you have to fund the credit account before you purchase so the bank knows that you won’t miss any payments. Responsible use of a credit card can help rebuild your credit.
Pay down any credit cards with a balance in excess of 50%, preferably getting them down to 30%. If you have a balance that is more than 50 percent, your credit score will drop. If you can, pay the balances on your cards; if not, do your best to pay as much as possible each month.
You can get better interest rates on credit cards and loans when you have a good credit score. By lowering your monthly payments, you’ll be able to reduce your debt more quickly. Get a good offer along with good rates, and you’ll have credit that you can pay off easily, and improve your credit score.
You can easily get a mortgage if you have a high credit score. One way to help improve your credit is to pay your monthly mortgage payments on time. Owning a home shows financial stability, which is great for your credit. A good credit score is necessary when you need to take out a loan.
Avoid paying off high interest rates so that you don’t pay too much. Creditors are skirting a fine line of law when they try to charge you exorbitant interest rates. You did sign a contract and agree to pay interest. If you want to sue creditors, you need to state your claim that the interest rates are too high.
Negative-but-correct information cannot be removed from your credit report, so be wary of promises from unscrupulous companies who promise to remove it from the credit reporting agencies. Unfortunately, negative marks will stay on your record for seven years. It is possible to have erroneous information removed from your report, however.
If you are attempting to raise your score with the credit bureaus, but are encountering road blocks whenever you apply for new credit, then open an account with a credit union. These credit unions can probably give you better credit options in the long run.
It can seem impossible to repair your credit score, but just knowing what the steps are and making a plan can make it seem much less intimidating. With the tips above, you are better prepared to take action and get your credit situation back where it should be.