Bad Credit Loans FAQ

Credit Repair - 3 Easy steps to repairing your credit

Credit scoring is a very complicated equation that incorporates many different factors. These factors are tied together and wind up giving each individual a credit score between 300 to 850. Although there are many credit repair companies available to assist you in rebuilding your credit, below are three very simple steps every person can take to improve their credit score.

1. Pay Your Bills on Time!
This may sound obvious, but to most people, this is the largest factor in destroying their credit- payment history amounts for 35% of your credit score. People blame their busy daily lives on missing the occasional payment, but it is far from worth it. Although many creditors do not report your delinquency to the credit bureaus until you are more than 30 days overdue, they can contractually raise your APR as high as 30%, and apply late payment fees monthly, typically in the amount of $35 a pop. If you weren’t having financial trouble before, adding hundreds and thousands of dollars in interest in fees will cause your minimum monthly payments to drastically increase.

2. Store Credit Cards
Although the idea of a 10% discount on your first purchase may sound enticing, don’t fall for it! The store makes money based on the fact that consumers will see the bill and realize they can make a lesser payment rather than paying the balance in full. Your initial store purchase of $100 can be spread out over months and years, while they tack on interest which causes your balance to often stay the same! If you read the fine print you’ll realize that most of the cards START at a 24.9% interest rate. Having many credit cards is destructive to your credit report, and looks as though you are in need of credit if you are constantly applying. While to you it seems like a simple 10% discount, to the credit bureaus, applying for all of the credit cards at stores you shop at looks like you are in need of credit and unable to pay cash. In stores, pay cash or use a low balance credit card if necessary, and feel confident that the 10% discount on that purchase IS NOT worth the damage it may cause to your credit score.

3. Keep Credit Balances < 30% of your Limit
Some people consolidate their debt, hoping that having only one credit card, even if it is maxed out, will look good on their credit report. In fact, it is the exact opposite. It is much more beneficial to your credit score to have that debt spread amongst several credit cards, staying under 30% of each cards limit. To the credit reporting bureaus, if you have smaller balances on several cards, are not near your credit limit on any of them, and manage them all, you look fiscally responsible. You are managing multiple accounts and not overspending. It looks as though you are comfortable financially and use credit wisely. If you have one credit card that is maxed out, with no other revolving accounts, it looks as though you are in a financial situation that is difficult to manage, you are spending beyond your means, and the risk of defaulting is much higher.

Credit is a very difficult thing to manage on your own, which is why there are many credit repair companies and counseling agencies available with more information that can be tailored to each specific individual to rebuild your credit.

If you need help in repairing your credit one of the most reputable companys out there is one click away.
Please click here to go directly to their website and let them help you start to clean up your credit report.