It is actually important for a certain number of things. Living in a country that relies heavily on credit cards and loans comes with a certain price that many people may not be really aware of: a credit score.
Living in a country that relies heavily on credit cards and loans comes with a certain price that many people may not be really aware of: a credit score. It is actually important for a certain number of things. For one,
it is how lending companies determine if you are a person they would want to give a loan to, and in times today, a loan is almost something people cannot simply do without. A good credit score allows a person to apply for and get approval on their loan with the least difficulty, at most a background check and a few questions and then the approval is set. A bad one, however, is not something anyone would want to have, since it almost guarantees a very difficult and arduous procedure when trying to get a loan, and in many cases, the loan may not be approved at all, since a person with a bad score is classified as a “risk”, or someone who is not really believed to be able to pay the amount that is borrowed. Business-wise, a “risk” is not something any establishment would want to take, although there are still some glimmers of hope for those who have had the misfortune of falling in to the category of being a “risk”, such as FHA home loan refinancing, although this may be getting ahead of ourselves.
Here is a simple and easy to follow guide on how to repair bad credit score, compiled from a series of guides that have been generally accepted as safe and reliable:
1. Secure a copy of your credit report from your local credit bureau. Check to see if there is any error, and if so, inform the bureau and ask how soon it would take to correct the error. In some cases, it would make the entire procedure if you could isolate where the error could have stemmed from, such as a creditor, and you could try to straighten the issue yourself, and if the issue is resolved in this manner, the creditor may even contact the bureau and verify that the error has indeed been corrected.
2. Outstanding debts are understandably the leading causes of this. Pay your outstanding debts as soon as you can, taking careful notice which ones charge a higher interest, and if possible, ranking them as priorities to be paid first before the others with lowers interest rates.
3. Should your debts prove to be something more than you can possibly pay for, try applying for a loan modification? There are legitimate organizations that help out borrowers who are in need of a loan modification, and it could be in your best interest to seek out these organizations and ask for help in working out a better payment scheme or a more manageable arrangement.
4. In seeking out solutions to your outstanding loans, you will come across supposed solutions wherein they offer you a solution to your loan, by offering you yet another loan, although this loan may be cleverly disguised, and may not easily be identified as a loan, much more, the payment for this disguised loan may be even more surprising. Be aware: solving a loan by taking out yet another loan will only drive you deeper into the vicious cycle. It is best to steer clear of these.
5. How many credit cards do you really need? It will largely help a person to realize that this was the primary reason why they are in the position of debt in the first place. Minimize the use of credit accounts and if possible, close or cancel any other credit accounts you may have until such time as you are able to breathe freely once more and are debt-free.
6. While you are in the process of getting out of the pit of deep debt, try not to dig yourself in even deeper. Live modestly, learn how to lead a life of frugality, and to the best of your ability, try to pay the necessary bills and dues promptly, and save whatever resources you can.
7. Once all of your outstanding debts have been paid, apply for a new credit card. Even just a single account that you are able to pay on time is good enough to establish a good credit history.
8. Pay off whatever monthly credit expense you acquire promptly. Paying on time is the one good way to establish a good credit score. It goes without saying that also necessarily means using the credit card responsibly.
