Bad credit is a very frustrating thing to deal with. Your financial options will diminish, fewer options will be open to you and you will not be able to take advantage of new credit line offers. But, you can fix your free 3 credit reports in a few simple steps and protect it for the future.
Order a credit report, and search it for old debts you've forgotten about, as well as for outdated information on paid debts. Once you have checked for mistakes, you can set about to fix the damage. Start by paying off debt with the highest interest rates first, and maintain the minimum payments on other accounts.
Take the time to ensure each month's credit card bill is correct. Whenever you see any, it will be necessary to discuss the situation with your creditor so that they do not submit negative information to the credit agencies.
Retain low credit card balances. By carrying a high balance, your credit score will suffer, even if you make timely payments every month.
You may get into the situation that you have multiple debts and you just don't have enough money to pay them all. Therefore, you should aim to spread out all available money for spending to all of the creditors that you owe money to so that each one can get a portion of your money. Even if all you're making is minimum payments, this will keep you out of collections.
Your interest rate will be lower if you have a good credit score. Lower interest rates make it much easier and quicker to pay off balances. Getting a good offer and competitive credit rates is the key to credit that can easily be paid off and give you a good credit score.
Look into credit counseling if your credit is a wreck. They educate you on how to eliminate all your debts, while continuing with your daily life. Be prepared to give money to people you owe and not incur any more debt.
People with bad credit ratings should contact banks and see if they can get the credit limit reduced. Avoid doing this if you don't think you will be able to maintain a low balance. You want to avoid lowering your credit limit to the point that you run the risk of maxing out your current balance.
While it can be hard to just let the negative reports go, the statement will not be considered when lenders look at your credit history. It is possible that this can be detrimental by drawing closer scrutiny to your report.
Try to negotiate with your creditors about the amount of interest you'll pay on an old debt. It is important to know the terms of your original agreement for the debt you incurred. Usually if you agreed to the terms the terms will be upheld as legal. If you believe the charges are excessive and your debtor will not negotiate down the interest and other additional charges, state laws might provide you with additional avenues to pursue a reduction in these charges. Federal law provides that when you are billed by a collection company the fees and interest cannot exceed the amount of the original debt. Although, in reality, you did agree in advance to pay any interest charges incurred. The only way you are legally able to sue the creditors is if you are able to prove that your interest rates are much too high.
Try to work with debt collectors and explain your situation honestly. Figure out how much you are able to pay, and then discuss this with them. Many times your creditors will be willing to negotiate some arrangement with you.
Try lowering the balance of any revolving accounts you have. Paying off your balances will have a perceptible positive impact on your credit score. The FICO system notes when balances are at 100, 80, 60, 40 and 20 percent of your total credit available.
While repairing your credit, look to get multiple credit types. The different types of credit you have are included in factoring out what your credit score is. If you pay your mortgage, car loan and credit card bills on time, it will help your credit score dramatically.
When in the process of repairing your credit, be sure to pay your credit card bills on time. Your credit report can be tarnished even by a few late payments. Paying something every month helps prove that you are creditworthy.
Stop spending more money than you have available. This might be a tough thing to get your head around. In recent years, easy credit has made it very fashionable for people to purchase the things that they cannot afford, and everyone is now beginning to pay the hefty price tag. Spend some significant time studying your finances, and set a realistic budget to which you can stick.
Begin paying off your debts now. Creditors look at your total debt in relation to your income. You will be seen as a greater credit risk if your debt is too high in comparison with your income. Build yourself a plan that can help repay your debts and commit to sticking to it.
Look for a credit repair company that has good reviews online and is legitimate. There are a lot of credit repair agencies that you will want to avoid. Some people have gotten scammed by these credit agencies. Read all the reviews that you can find and you should be able to make a decision about who you can trust.
Too many credit cards is a common cause of financial strain, so close all of your accounts aside from one. Transferring multiple balances to one single card is a way to gain control of your finances. It will be easier for you to make payments on a single credit card account, as opposed to several.
Use these and other tips to improve and maintain a credit score. Educating yourself about credit and how it works is an important investment that will pay off in the future.