You’re considering making an application for credit and want to take steps to increase your credit rating. A bad credit rating not only affects the cost of credit, it also determines whether your application is going to be rejected. Most lenders use personal pricing, so a bad credit rating means that getting a loan will be far harder.
How Do I Fix My Credit Rating?
Don’t give up hope because Improving your credit score can be achieved relatively quickly. You’ll need to correct credit report errors and manage your credit commitments better. Any incorrect entries on your credit report can be dealt with under the Fair Credit Reporting Act.
Credit reference agencies are legally obliged to take action to clear any erroneous entries within thirty days of receiving your letter. It’s important to be aware that the data held by Experian, Equifax and TransUnion is independent. You must correct the information held by each agency.
Reduce Your Spending and Settle Your Bills on Time
Unless you get your credit commitments back under control, it’s going to be difficult to sustain any improvement. Negotiating credit card debt enables you minimize your debts relative to your income, so your monthly repayments will be far more affordable. This is due to the fact that you’ll be making an affordable repayment, instead of paying the amount that’s stated in your credit agreement. Unless you can afford to make payment, you will default at some point. It’s better to resolve your financial difficulties now than to delay the inevitable.
A further important factor is credit utilization. For example, you shouldn’t use more than 30% of your credit allocation on a credit card in one month. Don’t just spend money on one card, use several cards and always settle the full balance at month end. If you have any money in the bank, use it to reduce your personal debt. The less financially exposed you are when you apply for credit, the more likely your application for a loan is to be accepted to be in the future. This is because you’re statistically less likely to default on the terms of your credit agreements.
If you don’t have live credit agreements, perhaps because you’ve filed chapter 7, you’ll need a form of revolving debt and instalment debt. You’re going to need a credit or store card and a loan or mortgage agreement. Provided that you pay your bills punctually, you’ll observe that your credit score starts to improve. The length of time that it takes to improve your FICO score will depend upon your earlier credit breaches. However, even people who’ve filed for bankruptcy are usually able to qualify for a mortgage within 2 to 3 years.
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