Replacing low credit with good credit rating is not really a hopeless task if you know the appropriate strategy. Listed below are tips you can incorporate in your life to regain a good credit standing.
Examine your report.
Obtain a copy of your credit report from the three major credit bureaus so you can evaluate the status of your debts. Make sure that all charges on your report are correct since errors also can badly pull down your credit rating. If you find errors, immediately send directions to your bureau that issued your report to ensure that incorrect items can are taken out from your file.
Pay your creditors.
If all the charges in your accounts are correct, it is your obligation as the borrower to pay your debts. Check your accounts and see which have the lowest amount of debt. If you can completely pay off one or two creditors, paying your other debts will be much easier. Don’t forget to check the interest rate for each account. It’s a good idea to focus on paying down debts with the highest rate to prevent quick build-up.
Speak with your creditors.
It is always worth the effort to try to negotiate with your creditors. Explain the reason why you are having a difficult time keeping up with your payments as you used to. Request your creditor if you can be given a lower rate or if extra charges can be waived. Most creditors are willing to make modifications with their terms to help a borrower in crisis but you have to take the initiative to speak about the problem.
Cut back on expenses.
You will be able to pay down your debts at a sooner time if you can cut bank on some of our expenses. Make a list of all things you pay or purchase in a month. See which items can be crossed out from your list. If you cannot completely eliminate an item, consider switching to a cheaper alternative. For example, you may consider subscribing to a lower cable plan or internet plan while you are working on debt repayment. Thus, you can use the money you save to contribute to debt repayment.
Avoid new debts.
Concentrate on your biggest task at hand which is to pay all your creditors. Obviously, this is not the time to use your credit cards for shopping. You want to minimize the burden of repayment by avoiding new debts at all costs.
Stay current with your payments.
As you strive to pay the last of your debts, see to it that you are not spending your money on extra charges such as late penalties. Be conscious of your payment due dates and see to it that you are able to submit your payments on time.
Use new credit to rebuild bad credit.
Once you are done with debt repayment, the next step is to further boost your credit score. A secured credit card or bad credit credit card can be a tool which you can use for rebuilding bad credit since approval for this type of account is not based on credit history. The key is to use the card for minimal charges regularly and to submit your payments on time.