Jul
5
2010
Give Your Credit File A Boost
Author: Simon K DunnHaving a good credit score isn’t the most important thing in life but it can seem like it is when you want a loan. Without a decent score it is almost impossible to get a mortgage to buy your own home. Sometimes circumstances conspire to ruin a credit score. But, there is no need to be dismayed it can be rescued with a little forethought and determination.
A bad score doesn’t necessarily happen because a person is careless with money. Being laid off can mean you don’t have the money to pay off debts that were reasonable, based on your previous income. Sickness and accidents can also make it impossible for some people to work, with the same result. Then, there are some people who simply fail to pay attention to how much they owe. And, their debt ends up escalating past what they can manage.
You can’t improve your score until you understand your debt. Look at your debt in detail. How many creditors do you have, how much do you owe and what rate of interest are you paying? What is the minimum payment on each loan and credit card? Each month put aside the money to make at least the minimum payment on every debt. Even this small action will help.
Talk to your creditors, explain your circumstances to them and ask if a repayment plan can be worked out. Ask them if the interest rate can be reduced. If they say no, you are not any worse off. But, sometimes they may be willing to move a little. Even a fraction of a percent reduction in interest can save you a lot of money and help you to improve your score more quickly.
Look for ways to make small savings in your daily expenses. Then use this money to pay down your debt. Start with the highest interest rate credit card debts first. If interest is calculated daily and the credit agreement allows you to make payments at any time, pay down your debt as soon as you have the money. Don’t wait for the monthly payment cycle. You can stop interest accumulating on amounts you pay early.
When you have cleared a credit card of all outstanding amounts don’t close it. Use it to pay for things you would usually pay cash for. Put the cash aside and then pay it all off on the due date with the cash. Using the credit card for small amounts and paying it off in full will make a big difference.
You can get free access to your credit report once every six months from one of the online credit reporting sites. Use this to see what your current score is and then set targets to improve it within a reasonable time span. Checking how you are going every six months will help you to stay focused and determined to succeed.
When you decide you need to repair your credit score it is not difficult to do. But, it will probably require that you change your spending habits. If your resolve is strong, it may take a little time, but you will succeed.
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