Credit problems can ruin your chances of qualifying for a mortgage or getting a low-rate auto loan. Some consumers run into credit issues because they don't know how to manage their debt and money, or because of other issues such as the inability to pay high medical bills and loss of employment. However, with better credit habits, you can improve your present score and become a prime candidate for financing.
Improve Payment History
Fixing a bad payment history is imperative to reversing credit problems. Late payments have a major impact on scoring, and a history of late arrivals or skipping payments will eventually ruin your credit score and stop credit approvals. Demonstrate a good payment record by paying auto loans, mortgages, credit cards and other bills by your due date. Starting anew will not fix your credit overnight, but consistently paying future bills on time will gradually add points to your personal score and slowly repair credit problems. You can start by authorizing automated payment withdrawals from your bank account to avoid forgetting to submit a payment by the due date, or mail payments a week or so before the due date.
Control Debt
Stopping credit card use and resolving to carry a low balance on your credit cards can help solve credit problems. Balances on credit cards can soar out-of-control with excessive spending. Outstanding balances also have a great impact on scoring, and lowering your balances to less than 30 percent of your credit limit can give your personal score a quick boost. Pay more than your minimum and use credit cards only if you can afford to pay off balances by the end of the month. Ask your employer for overtime work or get a part-time job on the weekends, which can provide the extra cash you need to increase monthly payments. You can also generate extra money by selling unused household items such as electronics, furniture or jewelry, or re-evaluate your lifestyle and cut back on certain non-essentials such as recreation, dining out and frivolous shopping.
Avoid Collections and Judgments
Collections and judgments can appear on your credit report after defaulting on a bill. But working with your creditors can help alleviate these negative items. Once creditors report a negative item to your report, this information can stay on your record for up to seven years. Avoid negative remarks if possible. Rather than ignore a lender or creditor's correspondences, talk with them and explain your situation. Propose solutions to avoid having your account sent to collections such as a lower monthly payments or possibly a skip payment option for a few months.
Clean Up Report
Even if there are legitimate negative items on your credit file, it doesn't hurt to check your report periodically for mistakes that can also reduce your personal score. Annual Credit Report issues free reports to consumers every year. Reports are quickly viewable online; and by disputing errors and asking creditors to update your file, you can add points to your score and help your credit improvement efforts.
Get Assistance
Not everyone has the skills to budget their money and manage their debts effectively. Rather than live with credit problems, be proactive and solicit help from a credit counseling agency. Counselors provide multiple services such as negotiating with a consumer's creditors to lower the interest rate on his debt, as well as offering education on how to avoid additional debt and manage existing debts/credit lines.
0 comments:
Post a Comment