It is always important to repair credit ratings before applying for credit. Failing to do so means that the majority of lenders will simply reject the application or charge a far higher rate of interest. Most consumers with an adverse repayment history will only be eligible for no credit check lending products, such as pawn shop and same day payday loans. Credit history repair becomes necessary when the borrower has defaulted on an agreement due to missed and/or late payments. Whilst there is no such thing as rapid credit repair, it is possible to gradually improve a FICO credit rating over time.
Repair Credit Ratings Before Applying for Credit – Make Reliable Monthly Repayments
Those with minor adverse are able to repair credit scores in as little as six months by making punctual repayments on credit agreements both now and in the future. Consumers who have declared chapter 7 bankruptcy or lost their home through foreclosure will be eligible to get a mortgage about three years after discharge. A low credit score is not terminal, it can be improved over a relatively short period of time.
Repair Credit Scores with a Poor Credit History Credit Card
Should a consumer not have any active credit agreements, it is worthwhile signing-up for a bad credit credit card. Although the terms aren’t particularly favorable, making timely repayments will be reported to all three leading credit reference agencies (Experian, Equifax and TransUnion). Similarly, not making repayments on-time will also be reported. Don’t take on too much debt.
How to use Credit Limits – Repair Credit Scores By Knowing How Much to Spend
It is important to avoid maxing out a credit card as this will reduce FICO scores. If unpaid credit card debt amounts to more than 30% of the applicable limit, pay this off, perform a 0% balance transfer or request an increase to the credit limit. Up to 30% of a FICO credit score is determined by how much the borrower owes in relation to the limit on their charge card. Close down any obsolete credit accounts.
Inaccurate Credit Reference Agency Data – Get Inaccuracies Corrected Before Applying for Credit
The Consumer Data Industry Association believe that approximately 3% of all reports contain inaccurate information. The Fair Credit Reporting Act 1970 gives consumers the right to correct these issues through the credit reference agency directly. These corrections can be carried out by the individual or through a credit attorney. The necessary supporting evidence will need to be provided.
How to Repair Credit Ratings
It is important to appreciate that credit history repair will not happen over night. However, making punctual repayments now and in the future will help to gradually increase FICO credit scores. Check credit reports for all three leading agencies as each holds its own data. Should there be any errors, get these corrected personally or through a credit attorney.