How to Repair Bad Credit?
Excellent credit, really bad credit, no credit at all! Listening to commercials on radio and television make it sound like credit ratings don’t matter and that it’s a cinch to repair bad credit if you need to. Think again!
What makes your credit bad? Many different things can count against you in making up your credit score that you may never even have considered.
Reasons to Repair Bad Credit
1. If your ID has been “borrowed” and used to buy a house, car or open accounts without your knowledge, you may have lost your good credit through no fault of your own. Clearing up ID theft is not easy; it is better to prevent it from happening at all.
2. Pay your bills, the full payment, and on time each month. If you are late with your mortgage payments, this will impact your credit profoundly. Don’t skip credit card payments. Do your absolute best to pay everything on time to keep your credit in the “good” column. A history of late payments is considered Bad Credit and a person who pays late is a bad risk for credit or a loan.
3. Collection agencies can be a problem and not just because of sending you collection letters or making aggravating telephone calls to you during dinner. Of course, the number one reason is that you did not pay a bill. However, there are times when not paying the bill was the correct thing to do (such as when a medical bill is coded wrongly, and you are charged for services when you should not be). Paying an old collection bill because it just “won’t go away” can adversely affect your credit, too. Collection agencies accessing your credit reports negatively reflect on your credit score.
4. Don’t apply for too many credit cards, loans, store cards, or other sources of credit that cause your file to be accessed multiple times by banks or lending companies, you are hurting your credit without meaning to do it. Pick one to three credit card application offers for bad credit such as the First PREMIER® Bank credit card.
5. Parents, relatives and good friends often find their credit affected when they co-sign for credit for someone else. The old saying “neither a borrower nor a lender be” by Ben Franklin was good advice, and it goes for co-signers, too. Parents are especially vulnerable to this when they decide to cosign for a child to have credit cards or a car when they go to college. Remember when you co-sign for someone that you are saying that you will pay the debt in full if the borrower defaults.
What if You Have Poor Credit Already and want to repair bad credit?
If you already have poor credit and are in need of money or credit for purchasing, be careful when considering loans advertised for those with bad credit. These companies often charge exorbitant fees as well as the highest interest rate permitted by law. I don’t need to say (but I will) that you should never, never borrow from a payday loan company.
Bad credit can affect your insurance rate (yes, the insurance companies consult the credit reporting agencies, too). Your utility company may require a large deposit from a person with bad credit before turning on the lights, water, telephone, internet or cable. Landlords run credit checks, too. You can be denied an apartment or house you want to rent depending on your credit score.
So, how do you repair bad credit history?
- Pay your bills on time ALL the time.
- Do not miss payments on a loan or credit card.
- Pay your credit card bills in full every month and do it on time.
- Monitor your credit for identity theft.
- Pay all debts in full including medical bills so that you are not reported to the
- credit reporting companies.
- Don’t change jobs, phone numbers, mailing address often. Constant moving can adversely affect your credit.
If your credit is already bad, do your best to clean it up by repaying all past unpaid bills. You can negociate to lower the amount you owe.
How do you repair bad credit? You can, but it is far from as easy as the people say on T.V. commercials. There are attorneys whose firms “specialize” in credit repair but you don’t have to pay someone to repair your credit; you can do it yourself. How?
First of all, lenders are afraid to lend even the smallest amount to someone with bad credit. Your track record shows that you cannot be counted on to make the necessary payments on time or they will charge you the highest interest allowable. You need to fix your credit. Try to improve your credit score.
avoid debt relief companies to repair credit
Many so-called “debt relief” companies are scams. These companies are supposed to negotiate with the companies you owe to get the payment reduced. You can do that yourself. Companies don’t want to and can’t afford to lose the money you got from them, and they employ people to find a way that you can afford to pay. If you feel you cannot do this on your own, be certain to find a reputable company with which to deal.
Consult your credit report to see what it is that is causing your bad credit score. If there is erroneous information on it, use a dispute form to have it corrected.
Sit down and make a list of all of your debts, when you opened the account, how long since you opened it, your highest amount owed, payment amount and schedule and how much you need to pay each month. If you are behind on your payments, figure out how much and when you started getting behind.
Contact each company and make arrangements for a new payment schedule to begin for you to pay off the account. Most companies will cooperate with you and help you repair bad credit.
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