Credit Repair Strategies For Building Good Credit

21
July

In order to build good credit, consumers must be well informed concerning their FICO scores that reflect personal payment history. These credit scores are in a range from 300 to 900, with less than 600 being an undesirable score and a better than average score higher than 700. Creditors are looking for that middle and high end of the FICO score range in order to offer the best interest rates for personal loan applicants. Consumers should be aware of their scores and review their private credit reports that are offered free of charge once a year.

It is typical for misinformation and some minor discrepancies to be found on most consumer credit reports. Unfounded negative remarks can be changed or removed by submitting a dispute form that is provided with each credit report. When all three reports are in good standing, the plan to build better credit scores will ensue. The first strategy for building good credit is to reduce excessive debt; a solid credit report should reflect debt that is no higher than 50% of available credit. Too many open accounts can weigh down credit scores dipping into the low range, but it is not advised to close several accounts at the same time. Stagger the removal of any unused or unnecessary accounts over a few months; too much activity will lower credit scores.

Many consumers have late payment notations and bankruptcies that remain on their credit history for seven years. Those with late pays and bankruptcy filings may find a successful route in rebuilding credit scores by using secured credit cards. These secured credit cards are based on the amount of collateral that borrowers are willing to place in a credit card account; the collateral amount is the credit limit on these types of accounts. Through a history of careful, on time secured account payments, consumers can realize a steady improvement in their personal credit history.

Credit scores can also be improved by opening a savings account. A steady deposit of money into a savings account bears a direct reflection on the management of financial affairs, and a desire to clean up a messy history of credit. Combining unsecured accounts into one large debt consolidation loan is a viable option to reduce the number of open accounts on credit reports. Many consumers gain a fixed interest rate and a drastic reduction in their financial obligations with this type of loan.

Others may choose to eliminate debt by negotiating with their creditors to accept a more affordable settlement amount. They may also negotiate to remove any negative remarks and have their creditor mark their account paid in full on their credit report. Consumers should insist that these arrangements be verified in writing rather than relying on a verbal agreement. Choosing a smart debt repayment system is a fast approach in realigning a more effective debt management program. Reducing overall household expenses increases income that can be used to pay off personal loans faster.

Opting for a low interest mortgage modification or refinance loan, is another option that will increase income that can be earmarked to pay off high interest bearing loans, and reduce the number of accounts on credit reports. Eliminating unnecessary cable and telephone charges is another way to modify bills and apply that money to more important accounts for debt reduction. To reestablish poor credit, consumers can rely on the free advice of consumer advocates and financial planners. In today’s economy the focus is on eliminating high interest bearing personal loans and credit card debt which will yield better than average credit scores.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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