Bad credit has become a big problem in the USA. Almost all American has more than ten thousand dollars on their credit card debt. With foreclosures at high record levels, these days, most people have to sit down and wonder the means to restore their credit. Restoring your credit is not easy; it requires dedication, determination and discipline. You should start small and work your way up the ladder. Following are some Credit Repair Tips to help you restore your credit report.
If you have just recovered from a major health problem, you cannot afford to sit back and relax unless you first set your financial house in order. An event such as a major illness affects many aspects of an individual’s life. One such area is that of personal credit rating. The loss of wages, the medical costs, and other associated expenses are not fully covered by even the most comprehensive health insurance scheme. Once you recover your health, you might find that it is now time for personal credit repair.
By using a few of these credit repair tips, you might be able to resolve the issues on your own. Otherwise contact a credit repair company and retain their credit repair services. One of the first things you should do when faced with a poor credit report is to check the accuracy and timeliness of the data. Sometimes, you will find that the data is incorrect or outdated. If this is the case, all you need to do is provide proof to the credit rating agency and the company that provided the inaccurate data in the first instance.
One of the great credit repair tips is to ensure that you do not rollover credit on your credit card. Just making the minimum payment on time is not sufficient to have a good credit rating. You need to show the rating agencies that you have sufficient funds to repay the at least 70 per cent of the balance.
Another step in personal credit repair is to obtain a debt settlement letter from your creditors. For this the credit repair company will negotiate a lower repayment amount with your creditors in return for a prompt payment. You will receive a full discharge from your debts, which you can then provide to the credit rating agencies to improve your credit rating. This can be part of your fresh start program, wherein you settle your debts in full and start afresh with a clean slate. A debt settlement is a good way out for those who are unable to repay their loans in full but want to avoid the stigma of bankruptcy. A debt settlement will not reflect negatively on your credit rating unlike a bankruptcy. A bankruptcy filing will appear in your credit records for ten years, making it difficult for you to apply for fresh loans.
When you set out on a personal credit repair mission, be sure that you stick to legal methods of doing so. Many credit repair companies suggest illegal methods such as changing your credit identity. This is a Federal crime and likely to land you in deep trouble. Be wary of credit repair companies that promise to erase genuine data from the records or charge for their services before delivering on their promise. While it is a good idea to consult and take professional help to repair your credit rating, choosing a good credit repair company is of utmost importance. Make proper inquiries before you retain a credit repair company.
* One of the easiest ways to restore your credit is a savings account. With as little as $300, you can go to companies to request for a savings-backed credit card. Initially, you will deposit money into a security deposit account and they will provide you a credit card with a maximum limit equal to the amount you have in your security deposit account. This card can be used just like any credit card to purchase or to get a cash advance from the ATM. You will still be required to make a minimum monthly payment every month and your security deposit can only be used in the event that you default on your secured credit card.
* Dispute negative report on your credit. This is one of the most important steps you can do to restore your credit. Every negative or erroneous item on your account can be disputed. When you dispute an item with the credit bureau and you succeed, you have to remove it from your record and improve your credit score.
* It is important to go through your credit cards and get the bill for each. Once you have these bills, you have to pay a small extra on each one until you get the twenty-five percent available credit line for your card. Doing this can drastically raise your score. You can also try the snowball effect to pay them, it usually works very well.
* To be able to pay your debt, you should be aware of your finances. You can get an idea of how to manage your charge-offs if you can secure money to pay for it.
* Establish a repayment plan to present to your creditor. You would be considered responsible and it would show you how committed you are in removing the charge-off record on your report. You should have a realistic plan on your repayment and never make offers of a payment that you cannot make. Bear in mind that your creditor will give you one chance to correct your previous credit mistakes.
* Negotiate with your creditor and offer to pay your charge-off. Make sure that you are talking to an authorized representative of the bank or the lender. It is necessary to document all the things that you agreed. In the event that the charge-off is paid, it will appear as paid as agreed on your report.
* You should also make bi-monthly payments and payments should be made very two weeks. This is beneficial since it lessens the overall interest you will have to pay over the life of your loan, since the interest is calculated against the amount due on payment dates.
Once you have restored your credit, your financial credibility will be re-established. All you have to do now is to ensure that these mistakes will not reoccur in the future by using these credit repair tips.