Credit repair isn't instant. It can take months or longer to repair damage caused by years of poor credit habits. While the process isn't easy, repairing your credit and building a better credit score helps you get loans and credit cards at a low interest rate. Fortunately, there are several ways to get assistance to clear your bad credit.
Consumer Credit Counseling
Some people can manage their debt and maintain a high credit score without professional help. But if you find it difficult to repair credit on your own, perhaps now is the time to contact a credit counseling agency for assistance. Non-profit agencies offer free help and provide plenty of resources and tools to help fix your credit problems. They'll educate you on how to budget and identify credit mistakes and work with your creditors to get your payments reduced and erase errors from your credit report.
Lowering Interest Rates
Paying off debt helps repair your credit score because high credit card balances take points off your FICO credit rating. Creditors can help because they have the power to reduce your interest rate on credit cards. Lower interest rates bring down your minimum payment. Voluntarily making higher monthly payments after receiving a rate reduction helps pay down your principal balance quicker, thus increasing your credit score.
Piggybacking and Co-signing
After a bankruptcy, repairing credit involves opening a new credit account and managing this account well. Because it's harder to acquire credit after a recent bankruptcy, you may seek assistance from a relative to help you get a credit account. Have someone include your name on their credit card, wherein you become an authorized user, or ask someone to co-sign a small personal loan for you.
Avoiding Credit Mistakes
Ultimately, repairing a poor credit history depends largely on whether you decide to modify certain habits and use credit wisely. Credit counselors can help, and creditors may decide to reduce your interest rate. But if you continue to pay bills late and accumulate large debts, credit problems will continue and possibly stop you from buying a home or automobile.
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