The current economic turn down has rendered a lot of us in financial turmoil. With job cuts, rising prices and unstable incomes, a good number of people have suffered from low credit scores and bad credit rating. We may be helpless about the situation happening to us as of the moment, but take refuge in the fact that there are around 30 million Americas suffering from a nasty credit report.
Besides, there will always be a number of ways to make your situation better. Remember that having a disappointing credit score as of the moment does not mean having it forever. There are solutions to get you out of the rut and improve your credit rating situation.
Remember that you are dealing with businesses, and thus, top-of-the-line assistance also entails not-so-affordable fees and charges. Try to look for a credit repair company that does not charge professional fees that are too steep. Moreover, a good firm should give you a schedule of payments outright before signing you up and not ask you for unexplained fees as you are being assisted. Needless to say, stay away from fly by night companies, especially those that only offer their services on the internet and do not have a physical office.
As for your own efforts to improve your credit situation, a lot of your energies can be channeled with just doing some steps with your credit card. You are not expected to act like a guru who can hike up your credit rating in just a matter of a few months, but hopefully your small efforts with your credit card will contribute to an improved credit standing over time.
For a better credit score, you should prioritize paying off or paying down your credit card debt first. Credit cards are such a major contributor to your credit score that paying them down will surely boost your rating dramatically compared to paying off your other loans such as auto or student loans and mortgages.
Credit card balances below 30% of the limit will certainly add points to your score, as credit rating agencies take note of the amount of credit you are actually using versus the limits available to you. You may hear people advising you to pay off the card with the highest interest rate first, but that will relieve you more in terms of your finances. If your primary aim is to make your credit rating higher, pay down the card (or cards) which you are close to reaching the credit limit with.
As you may have notice, credit card use is a major contributor to your credit score. Using your cards often, which eventually results to huge balances, will affect your scores whether you actually pay them each month or not. As mentioned earlier, your credit score is primarily affected by the ratio of your available credit and the amount you actually take advantage of.
Thus, the lower the amount of your available credit you use, the higher your score will eventually become. Beside, the report that is being presented to credit bureaus that ultimately calculates your score contains the balances reflected on your statement, not the payments you have made.
Be smart by “tricking” the credit bureau that you still have a big chunk of your credit card limit available with a low balance. Better yet, if you plan to pay off your credit cards, let the card accounts stay open for a few months. Don’t cancel the credit card account right after you’ve paid it to zero balance just yet. Let your credit card company report your balance-free account to the credit bureau, which will factor that in your score computation. That tactic will definitely fix you score.
A month before your account’s anniversary is when you finally cancel your account (that should be zero-balance already) altogether, so that you will avoid being charged of annual membership fees (unless you have arranged for other payment schedules such as monthly or quarterly installments or if you have an annual fee-free card).
We have included additional resources to help you with your research. They include information about a credit report, credit score range, credit score USA , debt facts and how to getting a good credit score.
I sincerely wish you luck as I do know the stresses that bad debt will bring.