A Few Ways to Rehab Your Credit

Aug 12, 09 A Few Ways to Rehab Your Credit
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Unfortunately, it is all too easy to become mired in debt.  As a result, credit, the lifeblood of the economy, becomes unavailable.  Once your credit rating is low, you cannot get additional lines of credit, including credit cards or loans to buy a house or car.  A poor credit score is an albatross that will affect every area of your life.  Fortunately, there are ways to rehab you credit.  While it is an arduous process, it is well worth it to begin rehabbing your credit as soon as possible. 1.)  Obtain a Copy of Your Credit Report Take a deep breath.  Take a long look in the mirror.  Then pay the small fees and get a copy of your credit report from Equifax, Experian, and Trans-Union.  Obtain all three in order to get a comprehensive view of your credit history.  Once you receive your report, circle any and all items that do not belong to you or are over seven years old.  These items are negatively impacting your score, but by law, they should have been removed from your report.  The most important step you can take is making sure your credit report is accurate.   You will also receive a credit score.  This measures your trustworthiness and determines the type and amount of credit you can obtain. 700 or higher-This is a very good/excellent rating.  You can purchase nearly anything on credit and will always receive favorable terms for loans. 619-580-This is a low score.  You will have trouble obtaining credit lines. 580 and under-This is an extremely poor rating.  You will be nearly unable to obtain credit much less purchase anything on credit. 2.)  Beginning to Rehab Credit Once you know where you stand, you can plan accordingly.  If your score is under 650, you have some work to do.  First, make sure that any bills or outstanding balances are paid on time.  Collection referrals and bankruptcies can seriously harm a credit score.  Thus, arrange to pay them off and make sure that they report your payments to the credit reporting bureaus.  Also, eliminate any unnecessary credit lines. 3.)  Do a Financial Reassessment Ask any creditors who have been paid in full to report that information.  In addition, create a budget that is accurate and that you can follow.  Credit lenders frown upon people who have more than 20% (excluding rent or mortgage) of their after tax income marked as expenditures. 4.)  Obtain a Secured Credit Card A secured credit card is one of the soundest ways to rehab your credit.  Secured credit lines are funded by cash you deposit.  Using the card and paying the balance for at least a year will greatly benefit your credit score. A prepaid debit card not only improves your credit, it also makes for safer, faster, and more affordable money transfers. Like anything, getting a low credit score is easy and increasing it is slow and time-consuming.  There are many resources that will provide you with assistance in rehabbing your credit, but beware of any group charging exorbitant fees.  Ultimately, cleaning up your credit report, paying your bills on time, and paying off your debt is the surest way to achieving a healthy credit score. STR would like to credit Bad Credit Advisor for much of this helpful information.

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