Improve Your Credit, What Can you Do About it?

To Improve Your Credit, it requires action on your part. Nobody but you care so much about a good score. Steps on this page will help you.

Be prepared to discuss this honestly with a mortgage professional. A good and responsible mortgage professional knows there can be justifiable reasons for credit problems.

For instance credit problems such as unemployment, illness or other financial difficulties. If your payments have been on time for a year or more and your credit problem has been corrected, your credit may be considered satisfactory. If not, you need to do what you have to and improve your credit score.

1. Maybe your credit is not so bad. You can reduce your other expenses. This may mean making hard choices or changing your lifestyle to fit your income. It might be good to sell a second car or take equity out of your home. Consider applying for a non-secured signature loan. Perhaps obtaining a loan from a relative. You could sell your home and paying off your debts with the proceeds and then renting for a time. Think about cashing out your 401K/retirement benefits or selling family heirlooms, jewelry, etc. What you’re looking to do is improve your credit so explore all options.

2. Possibly your credit is already damaged and the above options are not attainable, go through a consumer credit counseling service (“CCCS”) to improve your credit. Check your yellow pages for the local number. CCCS may be able to help you pay off your debts as if you were in a Chapter 13 bankruptcy, but you don't actually file for bankruptcy. You can try credit repair yourself also.

3. If CCCS won't take you, you may want to consider bankruptcy. Claiming Chapter 13 bankruptcy takes longer than a Chapter 7, but your credit will end up in a little better standing. Sometimes, this may be the first step to take so you can improve your credit. Chapter 13 bankruptcy gives you up to 5 years to pay off your debts. The disadvantage is that you're in bankruptcy for up to 5 years plus your credit report shows your bankruptcy for 7 more years after you have finished paying off your debts.

4. If you are so far in debt that you can never repay it, then the best solution may be a Chapter 7 bankruptcy. A Chapter 7 bankruptcy is the least desirable from a credit standpoint, but you are typically out of bankruptcy in 6 months and you don't have to repay any debt.

At times, this may be the only way down the road to improve your credit. The disadvantage is that this shows on your credit report for 10 years from the date of filing your bankruptcy.

Pay your Bills on Time

Now your debts are under control, but want to improve your credit score since it’s very low, the most important factor is to make your monthly payments on time.

Use pre-addressed envelopes enclosed with your statements to mail your payments and call the company if you don't receive your usual statement. If you carry a balance, send your payment as early as possible.

Most businesses calculate interest on a daily basis. So the sooner they receive your payment, the less interest you'll pay. It's the day your payment is received that counts, not the postmark date.

So don’t PROCRASTINATE keep in mind your goal to improve your credit. Give the post office sufficient time to deliver your mail. Five business days is a good guideline unless it’s a credit card. Then you should give ten to fourteen business days to avoid late fees.

Remember late payments many times mean late fees, higher interest, and/or a negative mark on your credit report. Which will then require credit repair. Save yourself the time and pay on time.

Never send cash. Open a checking account if you don't have one, or spring for a money order and keep your receipt. Finally don't forget to tell your creditors your new address when you move.

If you are worried about making payments, make a list of your debts and when the payments are due. A large calendar can help with this. Take the debts that are due on for the month and transfer over to the next month. Be sure to check your calendar regularly.

Contact your lenders immediately if you think you will have trouble meeting the monthly payments to arrange a payment schedule.

Get Advice

Using the money from your retirement account or tapping the cash value of your life insurance policy to pay bills or living expenses may have serious implications. Try to get advice from an expert before you take any major financial undertaking.

Pay Down your Credit Cards

Credit cards can be priceless in a crisis. They allow you to charge items and pay them off over time. But they can also be hazardous to your credit if you aren't careful and charge more than you can afford. Choose those credit cards with the lowest interest rates if you have to use them. Try to pay them back as soon as you can to cut your costs.

These are just a few tips on how to improve your credit. Some of them are serious suggestions and you should seek advice before you apply them. Yet for some this is the way they must go if they are a first time home buyer trying to buy that first home.