10 Tips to Dig Your Way Out Of Bad Credit

Are you struggling with bad credit? A lot of credit scores are going down during this difficult economic time.   Job loss, health issues, unexpected emergencies are creditall things that can lead to getting into trouble with your credit.  There are however, ways to improve it, so here are a few tips to consider and try.

  1. If you want to repair your credit but do not qualify for a regular credit card, consider a secured credit card. When you open a secured credit card account, you place money on deposit to cover any charges you may make. This ensures in advance that you will have enough money to pay for your debt. By using a new card responsibly, your credit rating will start to increase.
  1. Pay down any credit cards with a balance in excess of 50%, preferably getting them down to 30%. Your credit score can be negatively impacted if you are carrying a large balance compared to the available credit you have. While you are paying off these cards, reduce the balance to a small percentage of your available limit.
  1. Try to negotiate with your creditors about the amount of interest you’ll pay on an old debt. An interest rate that is shockingly high can possibly be ruled as illegal in certain cases. You did sign a contract saying that you would pay off the debt. If you go ahead and sue your creditors, ask that they consider the high rate of interest.
  2. If credit repair is something you are investigating and a company has told you they can strike true, but negative, information off of your credit report, they are probably lying to you. This information can stay on your record for about seven years. If the information is an error, the credit report can be corrected.
  3. You need to work with the companies from whom you have credit cards. You should contact the company and request a lower interest rate or a due date change if necessary. Some of your options include negotiating for a later due date, and asking for reductions in your minimum monthly payments.  Many creditors will work with you through your struggles.
  4. Be wary of credit repair scams that can get you in legal trouble. There are schemes online that will show you how to establish an additional credit file. Doing this is illegal, and you will certainly be caught one day. You could end up owing a great deal more money or even facing jail time.
  5. You should examine any negative entries on your credit report thoroughly if you want to fix your credit problems. Even if the negative report is true, if you can locate an error in the report, it may be possible to get it removed.
  6. Joining a credit union is beneficial if you want to make your credit score better but cannot get new credit. Credit unions sometimes have better rates and more options for your credit rather than a large bank. You can base this on how well the economy is in your area instead of the national situation.
  7. Check your credit report carefully.  Dispute any errors that you find on any of your credit reports. You should compose a letter to the agencies that have made the errors, and provide proof that you are correct. Use a return receipt when you mail your package so that you can prove that the agency received it.
  8. Do your best to not file for bankruptcy. This will have damaging consequences to your credit score for ten years. It might seem like a good thing but you will be affected down the line. Bankruptcy destroys your ability to get any sort of loan for at least a few years, so use it as a last option.

In closing, if you are paying each creditor something, even if it’s less than the minimum payment due, you’ll generally appease your creditors enough that they will not turn your accounts over to collection agencies.  Above all, own up to your credit status, be honest with your creditors, and most of them will try and work with you.  With these tips and a little motivation you’ll be surprised to find yourself turning that bad credit around.  Hopefully these tips can help your credit from falling any further, and get you back on the road to recovery and a healthy credit score.

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