Taking effective credit repair steps are something you want to undertake if your credit application is turned down by a lender. Did this situation happen to you? You applied for a loan, but to your surprise, your bank turned down your application. The bank manager then told you that you have bad credit and they consider you sub prime.
What does sub prime mean? Sub prime means that you have bad credit and score of less than 620 on the FICO scale. With sub prime status you still can apply for a loan from lenders who specialize in lending to sub primers. This means that you can’t get a loan on a favorable terms and interest rates. So, what should you do?
Improve Your Credit Score First
Before you apply for a loan take steps to improve your credit score first. Here are steps you can take to repair your credit rating:
1. Obtaining your credit report and score. The first step to an effective credit repair is checking your credit report. Get your credit score from all the three major credit bureaus and check for the incorrect information. If you find the errors, omissions, or misinterpretations write to the credit reporting agencies stating the errors and the corrective action for it.
2. Repaying old debts. The next step is repaying your old debts and making sure that all your payments on time. Also, take up a steady and reliable job so that you are able to show your income stability and your regular payment behavior to the lenders. By repaying these debts, no more negative reports would be filed in your credit history.
3. Getting debt help. If you need help, don’t be shy. You can consult a credit counseling agency to help fix credit rating. A reputable credit counseling agency has a number of counselor who are experienced in the field of credit. You can also call a commercial credit repair company for debt help, but they charge a fee for their services.
4. Changing your lifestyle. Do you tend to spend your money impulsively? Start developing a budget for all your expenses and make sure that you spend less than what you earn. Also, learn to use cash to make your purchases. If you carry lots of credit cards, reduce the number of credit cards you carry to one and always try to pay your credit card balance in full.
Effective Credit Repair By Yourself
You can repair your credit report yourself. You can even change your habits and add positive items to your credit history at the same time. By opening a new savings account, applying for a credit card and keeping the balance low, and asking a relative to co-sign on a credit card, you’ll re-establish your credit.
With or without debt help, when you clean up your credit report, repay all your debts, and change your lifestyle you can make an effective credit repair by yourself. If you follow the above advice then you may fix your bad credit in a period of only 2 to 3 years.