If you feel frustrated over your credit score and discouraged about your finances, read on and use these tips to help you recover. These tips will help your score stop failing and start improving.
Start using credit again in order to repair damage caused by previous negative activity. Prepaid credit cards are one way in which you can repair your credit. These cards are used like a normal credit card and are reported to the credit bureaus; however, you can only use the amount of money you deposit into your account. This helps prove to lenders that you’re credit worthy and responsible. You will be able to buy a house and finance it if you maintain a good credit rating. Making mortgage payments in a timely manner helps raise your credit score even more. Owning your own home gives you a significant asset to use in securing your finances, and your credit score will reflect that asset. This will be very helpful if the time comes where you need to take out a loan.
Create a plan to begin paying your debt down. When you have existing debt, it negatively impacts your credit score and is a major burden. Create a budget that you can live with, and use as much available money as possible to pay down your debt. If you do not have any debt, your credit score will go up.
Instead of avoiding collectors, talk to them to see what kind of payment arrangements they can offer you in light of your financial situation. Tell them how much you can pay, and when you will be able to pay it. Keep in mind that negotiation is always possible.
Getting a traditional home loan can be difficult, if not impossible, with imperfect credit. There is, however, alternative types of funding available that are offered by the banks. FHA and USDA are two such agencies who offer finance to those with lower credit scores, sometimes with low down payment and closing cost clauses. You may even qualify for an FHA loan if you don’t have enough money for a down payment or the closing costs.
Make sure that you keep records of everything when interacting with credit bureaus. This means every single contact you make needs to be noted; every email and letter that was sent needs to be saved, and have written summaries of your telephone conversations. When sending a dispute letter, send it certified mail as proof of mailing and receipt.