If you can’t sleep at night because of bad credit, it’s time to take action. The following advice will help in the path to getting your credit back on track.
If your credit is not perfect, getting a mortgage can be tricky. Look into alternative financing options like FHA loans. FHA loans offer lower down payments and help with closing costs.
If you have credit cards with a balance that exceeds 50% of your credit limit, you must continue to pay on them until the balance is lower than 50% of the credit limit. Creditors like to see you using your accounts, but still keeping your balances under 50% of your allotted credit.
Try to negotiate with your creditors about the amount of interest you’ll pay on an old debt. You may be able to challenge an interest rate that is extremely high. However, the contract you signed ensured that you agreed to pay off your interest. Be very wary of suing your creditors, especially if all of your issues were covered in the contract.
Don’t sign a debt settlement contract until you know what impact it is going to have on your credit score. There are ways to go about this that will have less of an impact and should be learned about before you make any kind of deal with a creditor. Debt settlers are more interested in their money than your credit rating.
Find and challenge errors on your credit report using the dispute process offered by each credit reporting agency. You should compose a letter to the agencies that have made the errors, and provide proof that you are correct. Mail your dispute documents to the agency using certified mail and a return receipt so that you can prove the agency received them.
Don’t spend more than you make each month. This will require a change in your thinking. While you may see your peers racking up credit debt, be sure to not fall into the same trap. Take a realistic look at your financial situation and determine how much you can actually spend.
Be certain to get any credit repayment plan in writing. Having the plan in writing will protect you if the creditor reneges on the plan or if your debt is transferred to another creditor. Once it is paid off, you should get that in writing to send to the credit reporting agencies.
Do everything you can to avoid filing 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 may seem like the right things to do, but your future will be affected. You may not qualify for auto financing or a credit card after filing for bankruptcy protection.
Credit Card Balances
If credit restoration is something you have been considering, the first step would be to pay down your credit card balances. First, pay down your credit card balances, starting with the highest interest. This action will show creditors that you are being responsible with credit.
If you want a higher credit rating, you will need to bring down the balance on any existing accounts. Paying off your balances will have a perceptible positive impact on your credit score. The FICO system has a new level for every twenty percentage points of your credit available.
Now you know that your bad credit doesn’t have to give you nightmares. You can fix your credit and not let it bother you anymore. If you do the tips listed here, you will surely get a good credit report that lots of people dream of.