Having a bad credit rating can seriously delay your goals in life. A low score will close the doors on many financial options and stop you from being able to make your own choices in life. Here are a few steps you can take to restore and protect your credit score.
Pay your bill early or on time each month to ensure that your credit score stays good. Late payments are reported to all credit report companies and will greatly decrease your chances of being eligible for a loan.
To show that you are serious about improving your credit, start systematically lowering all of your account balances. First work on the cards with the steepest balances or interest rates. This action will show creditors that you are being responsible with credit.
If you are trying to repair your credit score, open a new credit account, charge something to it, and then pay it off immediately. This will help get in good standing with the creditor, and can prove that you have made changes in how you handle your money.
If you have poor credit, you can ask the bank that owns your credit cards to lower your limits. This will improve the numbers the credit agencies use, but you will have to stay under the new limits. You won’t want to reduce your available credit to the point that your credit cards are charged up to the maximum limits.
Credit unions are an option for those who have run out of options. Credit unions focus more on the local situation instead of the national one, and may provide more options or rates that are more favorable than those of a larger bank.
When attempting to fix your credit, you must pay the minimum payment on each credit card each month. Late payments will hurt your credit scores even more. If you make the lowest payment, it will show that you are responsible.
Getting a traditional home loan can be difficult, if not impossible, with imperfect credit. If possible, apply for an FHA loan; these loans are backed by the United States government. FHA loans are a good option regardless of your down payment amount or funds available for closing costs.
If you apply these tips, you should be able to improve your credit and maintain a good score. It is always worth your time learning how to fix and maintain good credit, since it has a major impact on most of the larger financial deals you will make.