Some of the most common ways people get bad credit is from having late or unpaid credit card balances, home foreclosures and bankruptcy filings. In today's financial climate, it is more important than ever to have good credit. Did you know a bad credit score could even cost you a job, or prevent you from getting insurance coverage? In addition, it is easier to get a car or home loan with good credit. It is also easier to get those favorable lower loan rates if you have a good credit rating.
Therefore, what can someone do if his or her credit is bad? Fixing credit is challenging but possible. Here are some tips that may help if you are one of the many with poor credit:
- Negotiate with your creditors. Call your creditors, explain your situation and tell them you are trying to clean up your credit and offer them a 30-percent settlement payment. Debbie Chapman, a senior loan officer for FD Bankers in Hunt Valley , Md. says, "Try this first because most of them will take payments of 30 percent to 40 percent".
- Pull your credit reports and look for errors, all three of them (in the US ) Transunion, Experian and Equifax. These three nationwide consumer-reporting companies have set up a toll-free telephone number, through which you can order your free annual reports: 1-877-322-8228. There is a relatively high amount of errors on credit reports. Look for errors and dispute them to each agency listed above.
- If you have a credit card that is close to the limit, transfer some of the balance to another card to even up the available credit.
- Do not close old paid off accounts. These can actually help your credit score.
- From this day forward, pay your bills on time and do not overextend.
- Utilize FREE credit counseling from the Consumer Credit Counseling Service (CCCS).
- Bankruptcies and foreclosures can remain on a credit report for seven to 10 years. Therefore, reestablish good credit as soon as possible. The circumstances surrounding the bankruptcy can also influence a future lender's decision to give you credit for a new home etc. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic.
There is no fast and easy way to repair damaged credit that took months or years to establish. However, by using sound strategies and wisely using any new credit you can pull yourself out of the muck and breathe a little easier again.
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