Tips And Strategies To Repair Bad Credit
There are many benefits to repairing your credit; you are sure to find some of them here. You can borrow money more easily; receive lower interest rates on auto, home and other loans; and enjoy higher or better rewards from some of the most popular Credit-card companies in the United States.
Pay every bill and pay it on time. If you don’t have the money, lean on friends and family to help if you can. It takes a long time to recover from even one late or missed payment. Above all of your bills, keep your credit cards and loans paid and on time.
Limit applications for new credit. Every new application you submit will generate a “hard” inquiry on your credit report. These not only slightly lower your credit score, but also cause lenders to perceive you as a credit risk because you might be trying to open multiple accounts at once. Instead, make informal inquiries about rates and only submit formal applications once you have a shortlist.
“Laddering” is a term used frequently when it comes to repairing one’s credit. Basically, one should pay as much as possible to the creditor with the highest interest rate and do so on time. All other bills from other creditors should be paid on time but only given the minimum balance due. Once the bill with the highest interest rate is paid off, work on the next bill with the second-highest interest rate and so on and so forth. The goal is to pay off what one owes, but also to reduce the amount of interest one is paying. Laddering credit card bills is the ideal step to overcoming debt.
Do not hesitate to request an investigation into erroneous reports. Creditors have an obligation to accurately report your history. Disputing these issues is great. However, it is important that you put pressure on these agencies to investigate how and why the negative report was placed, and how this can be averted in the future.
You can review your credit report for free annually from the three credit bureaus. Use these reports to make sure that all information on them is correct. Errors are not uncommon and no one will notice it or fix it other than you. Having the wrong information on your credit can damage your score, or cause you to be denied a loan.
If you have challenged or denied negative items on your credit report and some still remain, you may be able to reduce that number even further by contacting the collection agency or creditor. By law, these companies need to provide written proof that the account is yours. This means a hard copy of a signed contract or another legally binding document, not just a printout of the information they have in their computer system. Many of these companies do not hold onto these documents. If they can’t come up with acceptable proof, they are required to remove the account from your credit report and stop all collection attempts.
Avoid big purchases prior to your needing your score to be at its best. Anytime you take out a major loan, such as a car loan, your score will take a short dip. This is due to the fact that you now have much more debt than you did before.
If a collection agent does not inform you of your rights stay away. All legitimate credit collection firms follow the Fair Credit Reporting Act. If a company does not let you know of your rights they may be a scam. Learn what your rights are so that you know when a company is trying to push you around.
An important tip to consider when working to repair your credit is to pay your bills on time. This is one of the most important steps for maintaining good credit and preventing your score from dropping. Bad marks for past due accounts will stay on your account for five to seven years.
When you enter into the process of repairing your credit, you must have a great deal of patience for the outcome. It is going to take quite a while to see any repairs or improvements. It is most definitely not an overnight fix and there are no “magical” solutions that will fix it quickly.
If you use an online credit repair service, be sure to take the time to read all of the fine print that is in the agreement. Do not just skim any agreement just to get through the process or you may find that you have a pile of fees added up when you finalize the process.
Now that you are armed with a bit more knowledge about credit repair, and have learned some of the benefits. Hopefully, you are motivated to either repair your credit or maintain your current good credit score. With a bit of work and some self-control, you will be well on your way to good credit.