How to Fix Bad Credit
Before your loan application is processed, it is usual for the lending institution or bank where you have applied to run a check on your credit report and get your FICO score. If your FICO score is high that means that you are a low risk customer, you can be counted upon to make your premium and interest payments regularly and on time, and you will face no hassles in getting prequalified for your loan.
Having a history of bad credit can reflect very poorly on your chances of getting a mortgage or a refinancing loan. If you have bad credit, it is important that you take the proper steps to mitigate the debt. Your credit rating will improve as you pay off your pending debts and you can work towards becoming financially secure.
Here are some of the many ways in which you can go about fixing a bad credit.
Don’t let the scammers mislead you
In the first place, do not under any circumstances fall for the tall claims made by the sundry companies hawking their Credit Repair Services through aggressive advertisements by way of fliers, newspapers, T.V., Radio, and Internet. There is no legitimate way they can ‘erase’ your credit problems ‘100%’ or remove bad credit reports from your credit file. And if you go along with their offer of giving you a new credit identity, you could find yourself arrested and charged for fraud. Misrepresenting your personal details and falsifying your financial and work details for the purpose of securing a loan application is a federal offense, a crime you can go to jail for. So, understand this, there is no magic wand that anyone can wave to cure your financial woes. You have to salvage the situation yourself by a good deal of patience, common sense, self-discipline, and determination.
Get a copy of your credit report
The credit report can be obtained from the central bureau of the three main consumer reporting companies in the USA – Equifax, Experian, and Trans Union. You can contact them separately or at the same time through their common website – http://annualcreditreport.com. On your application, they will send you a free credit report from here. Remember that you can directly contact the credit report bureau. There is absolutely no need to go through a credit service company that will charge you a good amount in fees for something you can access for free. You should apply for your credit report every year actually, whether you have bad credit or whether your financial situation is sound. It is possible that certain glaring errors may have crept into the report and, if you neglect to get these errors correct, they may spoil your credit rating. Another thing to watch out for is Identity Theft. There are enough stories around about scammers appropriating legitimate identities for fraudulent purposes. It is better to keep an eye on your credit report and avoid such problems.
Clear your debts
Start paying off all your outstanding debts. Try to clear up your debts as soon as you can. First repay all the debts that have the higher interest rates and then work your way through the others.
Don’t lag behind on current bills
Be prompt and regular about paying off your current bills. Late payments will not reflect well on your credit report.
Reduce the credit cards
Cut down the number of credit cards you have or close down the accounts altogether. Don’t apply for a new credit card until you have paid off all your debts.
Do not file for bankruptcy
And do try to keep away from tax liens and collection accounts as well. If you file for Bankruptcy, tax liens, and collections, it will figure prominently and not to your advantage on your credit report for ten, seven, and seven years respectively. Which means that for the next ten years you will have little or next to no chance of getting your new loan applications approved.
Polish up your act
If you lead a lavish life-style, well, do consider sobering up a bit – at least until your debts are cleared out of the way. Cut down on all unnecessary expenditure and sell some of your assets if it becomes absolutely crucial.
And after you have cleared up your bad credit, you may return to square one and start all over again.
| By Sonal Panse |
Credit repair is the process of cleaning up your credit report and optimizing your scores. Credit repair has never been so important. Your credit score will determine the outcome of any loan application you make.
Credit Repair Coach on Inaccurate Scores
Did you know that there is some type of error in around 80% of credit reports? Depending on the kinds of errors made, this can lower your credit score tremendously. Plus, these errors may even make you pay more for new loans and credit.
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