Rebuild Credit

Repairing your credit is the first step in rebuilding credit. To bring up your score, it takes patience, dedication, and a willingness to change your ways. Credit scores are based on credit history. Meaning, creditors will look at several years’ worth of your credit history to determine whether or not you are a good credit risk. You know you need to have a healthy credit score in order to get the things you want in life. In fact, your credit score affects all aspects of your life.

  • Without a good score you will struggle to get loans or will likely pay high interest rates on car loans, home loans and even personal loans.
  • You will pay higher auto and homeowner’s insurance rates.
  • Paying high interest rates take money directly out of your pocket and affects what you can buy today, including things like groceries.
  • Ability to secure a lease on your dream apartment will be impacted. Low credit scores may keep you from renting an apartment or home without having a co-signer.

When you are short on cash, because you are paying high interest rates on various loans and credit cards, you are tempted to rely on credit cards to buy day-to-day items. This creates a dangerous cycle that can leave you swimming in debt and struggling with the monumental task of rebuilding credit.

Why is rebuilding your credit so important and how does it help your credit score?

  • Establishing credit is one of the ways you can increase your credit score. You need to prove your ability to make payments on time.
  • Rebuilding credit is crucial to achieving goals you may have like buying your dream home, owning a new car, or even securing a loan to send your child to college.
  • You never know when you may need to take out a line of credit to pay for medical bills or elective procedures like braces for your child.

There are numerous benefits to rebuilding your credit that will make your life a little easier.

  • Confidence and peace of mind knowing you can buy the things you need in life without worrying about a poor credit score holding you back.
  • Getting lower rates on insurance, car payments and other financed items puts more money in your pocket to put into your savings account.
  • Freedom to choose the best loan with the best rates available instead of taking whatever you can get.

Life is stressful enough without worrying about a low credit score. You need credit from time to time to get the things you want most out of life. Rebuilding credit is something that can be done. With the 10 strategies outlined in rebuilding your credit report, you can achieve that healthy score you have longed for. You won’t have to worry about being denied credit and being forced to do without. It is time to make a change for the better and start doing what you can to take back control of your credit.

Build Credit in 5 Steps

A healthy credit score can make life much easier and enjoyable. Unfortunately, many people don’t realize how important a credit score is to getting the things they want most out of life, like a new car or their dream home. Missing a payment on a credit card or allowing a bill to go to collection can have long lasting effects on a credit report. Negative marks on a credit report can cost several points and when it comes to a credit score, every point counts. It is time for everyone to learn how to build credit again and achieve those dreams that they had years ago.

Here are Kelly’s 5 tips to rebuilding credit.

  1. Make a concerted effort to pay every bill on time every month, even if it is only the minimum balance. If there is no possible way to make the payment, call the creditor and ask for an extension. A five-to-10-day extension may be granted if a promise to pay is given usually with a checking account number or debit card number.
  2. When considering how to build credit, consider opening a secured credit card to begin the rebuilding process. Charge only what can be paid off within a month or two. Avoid charging more than 30 percent of the total credit line in a single month. Meaning, if the card has a $200 credit line, do not charge more than $60 in a single month. Fees and interest must be considered.
  3. Do not apply for numerous new accounts within a short period of time. Every hard inquiry negatively impacts a credit score. Creditors view it as a bit of a sign of desperation and will hesitate to grant a new credit line. Stick with the current cards presently open and work at establishing a positive payment history.
  4. When rebuilding credit, it is important to stay apprised of any happenings on a credit report. A credit report should be pulled every six months to check for any negative marks as well as movement on the credit score. Ideally, if a person pays each of their accounts on time every month and does not have any negative remarks reported, the credit score should start climbing upwards. If there are unwarranted negative marks, take immediate action to have them removed.
  5. After 12 months of paying bills on time and carefully managing open credit lines, it is a good time to apply for an unsecured credit card. Try working with the company who holds the secured credit card. Make the call and ask to be switched to an unsecured card. If it isn’t possible, only apply for one card through another bank.
  6. It is possible to recover from past credit mistakes. For those who want to know how to build credit, follow these five simple steps and remember patience is of utmost important. Good things do come to those who wait. A damaged credit score does not have to be permanent. A little diligence and patience are all that is needed to begin the rebuilding process.

What is a Bad Credit Score?

There has been plenty of talk about good and bad credit scores in the news lately. It is no secret that there are plenty of people who have come to the realization that their credit scores are holding them back. The bad credit score is holding them back from owning a home, going to college, or even buying a car. So, what is a bad credit score? The terms have changed quite a bit over the last decade or so. What used to be considered good has been bumped down to the fair category making it much more difficult for people to obtain prime interest rates on loans.

Here are 5 things you should know about scores and how to determine what is a bad credit score versus a good score.

  • A bad score is somewhat subjective depending on the type of credit a person is applying for. Home loans have some of the strictest credit standards while department store credit cards have lax standards. Home loans will typically consider anything under 640 as a bad score, but that doesn’t necessarily mean it is impossible to get a home loan under some programs.
  • Credit card companies will often offer credit lines to those with scores ranging in the high 500s and low 600s, but the interest rates will be less than prime. There may be additional fees tacked on as well.
  • When talking about what is a bad score, it is important to understand that scores under 500 are considered very bad. People with scores that low will struggle to get unsecured loans or credit lines. However, it isn’t the end of the world. It is possible to raise a credit score.
  • Unfortunately, it doesn’t take much to knock a credit score down. One late payment, bankruptcy, or medical bill sent to collection can reduce a score by double digits. It takes very little time, a matter of months, in fact, for a score to be negatively impacted, but it can take several months, if not years to repair.
  • Consumers with scores that fall into the bad credit range will pay close to double the interest rates compared to those with scores above 640. It is very costly to get an auto loan with interest rates that are essentially punitive. Many consumers would be better served to save the cash in a bank and buy what they need outright rather than take out a high-interest loan.

Understanding how scores impact interest rates for loans and credit cards is an important step to rebuilding credit. Before applying for credit, consumer must have a firm understanding about what a bad credit score is. Never make assumptions about whether a score is good or bad until you have the facts. Choose wisely when it comes to applying for new credit. Don’t get sucked into cards with steep interest rates that will cost you more money and drive you further into debt.

Home Loans with Bad Credit

For those who dream of owning a home, but have less than perfect credit, there are still options. There are several creditors who offer home loans for bad credit. While these loans do not typically have prime interest rates, the loans make it possible for everybody to fulfill the American dream of owning a home. Once a person’s credit has been built up, refinancing is always an option. Here are Kelly’s tips for finding a home loan with a fair to good credit score that doesn’t qualify for prime rates.

  • It is crucial every person checks their credit score before applying for any loan. Taking the time to dispute discrepancies on a report is an excellent way to add a few points to a credit score, which will ultimately increase the chance of being approved for a loan.
  • Check around and research any bank or agency that offers home loans for bad credit. There are too many shady companies willing to charge a small fortune in fees to those who feel they cannot get a loan any other way. Check with the Better Business Bureau, the internet and friends and family members who have dealt with a particular bank.
  • Check with local and state agencies that specialize in home loans for those who would not otherwise qualify for a standard loan. FHA loans are an option as well as loans for homes that are in rural areas.
  • Make a concerted effort to come up with a substantial down payment. Many lenders will underwrite home loans for bad credit with a 20 percent down payment. Borrowed down payments are acceptable. However, the money needs to sit in the bank for at least three months.
  • Check with a credit union. Local credit unions are more apt to lend to their account holders who are looking to buy a home in the area.

While shopping around for a loan, it is imperative a person makes a concerted effort to increase an existing score. Every point helps. Learn more about what needs to be done in order to do this. If it is proving difficult to obtain a loan in most markets, it wouldn’t hurt to ask a trusted friend or relative to cosign the loan.

Loans for bad credit are out there and many banks provide them. It just takes a little dedication and these five tips to find the best loan possible.

5 Things a Consumer Better Know about Bad Credit Car Loans

A car is often viewed as a necessity for most people. Reliable transportation is necessary in order to maintain a decent job. Without a job, it is nearly impossible to pay bills and establish credit. Unfortunately, for people with bad credit, it can sometimes be difficult to obtain a loan to buy a car at an affordable rate. However, there are bad credit car loans available for those who need them. Before seeking out a loan, Kelly has 5 tips every consumer needs to know about these types of loans.

  • Before beginning the search for a loan, it is important to know what kind of credit score a person is working with. Never assume a potential creditor is being completely honest about the status of a person’s credit score. Pulling a credit report is also an excellent opportunity to check for any discrepancies that could be unnecessarily bringing a score down by several points.
  • It is important every consumer takes time to shop around for bad credit car loans. Going in with the attitude that any loan will do is detrimental and could end up costing thousands of dollars in the long run. Never take the first loan offered until after checking around and comparing rates.
  • Apply for a loan through a credit union before heading to a dealership. Credit unions offer competitive interest rates to even some of the riskiest buyers. Check with local banks as well.
  • Do not assume poor credit restricts a buyer to a dealership that caters to those in need of bad credit car loans. There are plenty of car dealerships willing to offer favorable deals to those with low credit scores. Car loans are much easier to obtain because of the ease in which lenders can repossess property that is in default.
  • Do the math on any loan offer presented. Do not fall for low monthly payments that last six years over payments that are a little higher, but the loan is paid off in three years. Longer loans tend to translate to more interest being tacked onto the principal of the loan.

While it is a fact people with excellent credit ratings will get loans with prime interest rates, it is entirely possible to get bad credit car loans with interest rates that are close to the prime rates. All it takes is diligence in finding the right loan to suit a person’s needs.