Bad credit is an unfortunate detour on the road of life. It can make you feel like you are in debtors’ prison with no hope of escape. That said, it is possible to restore your credit to its former glory and prevent it from being wrecked again.
Getting money for a home loan can be difficult, particularly when your credit is less than perfect. If this is the case, you can apply for a loan through the Federal Housing Administration (FHA). The credit requirements for these loans are more lenient than those of conventional lenders, and the federal government also guarantees the loans. FHA loans even apply for someone who doesn’t have closing costs or the funds that are needed for down payment.
If you are unable to get an unsecured credit card due to your low credit rating, consider a secured card to help reestablish your rating. This card is very easy to get, because you put money into an account ahead of time and then spend from that, so the bank doesn’t have to worry about not getting their money. Using this new credit card in a responsible manner will help to build back up your good credit rating.
Start by paying off credit cards with accounts 50% over your limit. You can concentrate on another card once these accounts are lowered to under half of your limit. You should keep your balances under fifty percent; anything over this and you can lower your credit rating, so spread out the money you own and pay down your credit cards.
If you credit score is good, you should have no problem purchasing a house and obtaining a mortgage. Fulfilling your mortgage obligation in a timely fashion does a great deal of good for your credit rating. When you own your own home it shows that you have assets and financial stability. Having a home also makes you a safer credit risk when you are applying for loans.
When trying to rehabilitate your credit, it is important to work with each credit card company you are indebted to. This will help you stabilize your situation and start working towards a better financial situation. Don’t be afraid to ask for alterations in interest rates or dates of payment.
Never hire a credit counseling company without doing some research, so as to ensure they are a reputable organization. Some counselors truly want to help you, while others are untrustworthy and have other motives. Other programs, while they sound good, are complete and total scams. Intelligent customers will make sure to determine the legitimacy of a credit counseling agency before acquiring their services.
Don’t do anything illegal. The Internet is rife with many scams that will go into detail about creating yourself a brand new credit file and making the old one magically disappear. Do not attempt this because it’s illegal; you will not be able to avoid getting caught. In addition to the possibility of facing jail time, you could be fined, your attorney bills may be substantial, and your reputation could be ruined.
Prior to agreeing to a debt settlement agreement, find out how that process is going to impact your credit score. Some settlement agreements can actually be bad for your credit score, so be wary and do your homework. Some are out there just to take your money; they don’t care about your rating.
Take a look at your credit report if you have a bad score. If you find errors in any of the information, you might be able to request the entire negative record be removed from your credit report.
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. Credit unions may be able to offer more credit options or better rates than a larger bank, based on an understanding of the local area rather than the national situation.
If you find any errors on your credit report, you should dispute them. Write a dispute letter to any agencies with recorded errors, and include supporting documents. 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.
Credit Card Accounts
A first step in fixing your credit is to close all credit card accounts that are unnecessary. Aim to only have one account. You can make arrangements to pay the balances, or transfer the balances of your closed credit card accounts to your single remaining credit card. Instead of paying several smaller credit card bills, you can work to pay off one credit card.
Following these simple tips can help you get on the road to repairing your credit and keeping it healthy. Credit rating affects your life in many ways, so make sure to learn all you can about it.