Bad credit loans and guaranteed approval loans are all over the market now. These loans are especially designed for people with bad credit. Since bad credit or a low credit score is unacceptable for standard loan lenders, some people are left with no choice but to apply for a bad credit loan. Although bad credit loan lenders grant approval despite a bad credit rating, these loans often come with high interest rates. If the applicant is not careful, he or she may end up with a predatory lender.
For this reason, financial experts often advise consumers to try working on repairing bad credit first before applying for a loan. You may need to wait at least six months or more to see improvements on your credit score. Achieving a good credit score will enable you to get better rates as well as more convenient repayment terms. More importantly, you can be assured that your loan application will be approved.
In this article, let’s talk about the things you can do to start repairing bad credit.
What You Can Do To Start Repairing Bad Credit
If you’ve decided to starting repairing bad credit, stay away from credit repair agencies who may promise to give your credit “instant fix” or “instant repair”. Some agencies may claim that they can easily “fix” your credit score just by making a few changes on your credit report. Those are just lies. All they are doing is contact credit bureaus with requests to remove negative items from your credit report, HOPING they can get one or two items removed.
What this tactic does is flag your account with the credit bureaus and makes it even harder to get anything done. Credit bureaus HATE this tactic since it is a waste of time. The only way to begin repairing bad credit is to settle your debts with your creditors and maintain a good standing with your payments.
Get a copy of your credit report
The first step to repairing bad credit is to get a copy of your credit report. This way, you can clearly examine the status of your accounts with all your creditors. You can also check the accuracy of all information on your report. In case there are errors, you should write a letter to the credit bureaus and ask for these discrepancies to be corrected. Notify your creditors about these disputes as well.
Always send communication between yourself and creditors or the credit bureaus via certified mail. DO NOT send a letter over the internet. Write a letter on your own. Forms are also a red flag to credit bureaus because of the validity of the sender.
Come up with a repayment plan
If you find your credit report accurate, then it’s time to work on effective repayment plan. It is important that you settle all your past due payments with your creditors. If you haven’t tried talking with your creditors, now is the best time to do so. Negotiate well.
Request for a new repayment term to be extended for you so you can have an easier time paying your debts. If your creditor can see your willingness to pay, they are most likely work out a solution for you. Once you negotiate the amount, ask them if they will be willing to remove themselves completely from your credit report. Some companies will do this and some won’t, but make sure that they change the listing to at least “paid as agree”. As always, get EVERYTHING in writing before you give them a penny.
The best way to start repairing bad credit is to start repaying your debts. Don’t incur new charges that can add to your credit problems. Consult a reputable credit counseling agency if you need help in managing your finances.
