Restoring Your Credit Worthiness
By Neil Beaton
RESTORING CREDIT WORTHINESS
Have you been denied a
loan? Have you been offered one at an unbelievably high rate of interest? Are
you having trouble getting a new credit card? If these things have happened to
you you've got bad credit!
What is bad? Can you
fix it?
The most important
indicator of poor credit is a low credit rating, otherwise known as a low FICO
score. A score of 650 or lower will give you problems while 500 is abysmal. Fico
is a number that is calculated, taking into account your total debt, the number
and length of late payments, and some other factors. This number is calculated
by three main credit reporting agencies and is then made available to lenders
and to the individuals themselves.
Improving your credit
rating is difficult but definitely possible and is certainly worthwhile. The
first steps are personal and have to do with your own habits and tendencies. If
you have trouble with self-discipline or if you find it impossible or difficult
to keep financial commitments you may want to seek some kind of counseling,
perhaps from a credit repair specialist.
But there are other
things that you can do that are definitely in your control.
You can begin by
getting a copy of your credit reports from all 3 credit reporting agencies:
Experian, Trans Union, and Equifax. By law these must be available to you for
free once per year. They contain a list of all your debts and indicate problems,
such as the number of payments late by over 30 days. The agencies may charge for
the actual FICO score but you can sometimes get that for free as well. Review
the documents with a fine tooth comb and list all mistakes. Involve a credit
repair specialist, if necessary.
Estimates of credit
report errors range from 85 to 40%. Some, such as an incorrect age or address
are easy to fix but some mistakes take a little more attention. If accounts are
shown as open even though you had closed them, or if debts are listed that were
incurred by a different person, you should make note, gather your proof and
contact the credit reporting agency and politely insist that the information be
corrected. Be aware that they will not simply take your word for it but will
check it out themselves, so be sure to be honest with them.
Next, make a detailed
and realistic budget. Include all monthly obligations and add in a buffer to
take care of unexpected expenses. Determine to keep to that budget. Then call
all your creditors and tell them what you have done and ask for a reduction of
the debt. Be polite at all costs. If necessary, ask for a supervisor. They may
not immediately grant your request but as you keep making steady payments they
may respond more favorably when you make a follow-up call a few months later.
Keep notes of the agreements and keep your word.
Cut up and return as
many of your old credit cards as possible. Keep paying on the outstanding
balance until the account is eliminated or you can convince the creditor to
forgive the remaining debt. Make sure that you try to make more than minimum
payments. You can spread this policy out or concentrate on one card at a time.
As a credit card's balance drop keep up the larger payments and when that card
is retired apply all your resources to the next card. But make sure to keep up
with your minimums on all cards while doing this. Some experts advise that you
pay off home loans first and then concentrate on small amount, high APR debt.
Pay off these accounts first and then move on to debts of larger amounts.
When applying for a new
card, you have some options. You can obtain a secured card, no matter what your
credit rating is. You can use it just like any credit card but the limit is
determined by how much you actually put into the account. This card should be
for emergencies only.
Other, specific kinds
of credit cards, such as gas cards or department store cards may be easier to
get and if you use them responsibly you can start to see an improvement in your
FICO score.
Fixing credit
worthiness is less like a repair and more like mending. When you repair
something you quickly replace whatever is broken and make it like new. When
something mends, the process is much slower and takes a lot of patience. But if
you stick with it your credit can be mended just as surely as a broken arm can
be mended. So take the first steps now. Have a conversation with yourself and
follow the steps outlined in this article. Stick with it!
Neil Beaton
http://www.a1-mortgage-4-u.com About the Author None
Article Source: http://www.simplysearch4it.com/article/18061.html
If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/18061.html" as shown above and make it hyperlinked. |
|