Three ways to repair and rebuild your credit
The reality of this day and age is that you cannot live without being indebted to either an individual or a company. When you want to embark on a project such as building or buying a home, buying a car or even funding your kids’ college education, huge amounts of money are involved. These lump sums are usually hard to come by for the majority. You, therefore, find yourself seeking loans from financial institutions to fund your projects. Whether it is a credit card, an instant payday loan or a mortgage, any lending facility you utilize has repercussions on your credit rating.
Acquiring a financial loan, of course, means that you are subjected to a loan repayment plan for a number of years, and each successful loan repayment contributes to your credit score. However, when you fail to repay your loan, there are dire consequences.The credit bureau records your credit rating as poor. You are also faced with the possibility of bankruptcy or foreclosure. It becomes near-impossible for you to obtain any more loans from the lenders, and the only solution you have is to rebuild your credit. There are three ways in which you can rebuild your credit.
Start by managing the debts you have amassed from the use of credit cards before they lead to grievous financial conditions. Debt management can be done through the debt consolidation strategy. You will have to obtain a 0 balance transfer credit card for this. It will enable you to consolidate the outstanding debts that have high interest rates in other credit accounts into one account that has a low rate. This credit card is ideal because you will have access to a credit card loan with 0% interest rate. The meaning of this is that you will be charged no interest, by way of 0 balance transfer.
The 0 balance transfer credit card brings you benefits such as 21 months of a 0% APR. In given promotion periods, you get to make transfers for high-rated balances into zero balance. You are also protected from fees and processing charges payments in the case of the credit card getting lost or being used to make unauthorized purchases.
When you go to make an application for this credit card, make sure you go for the best online offers. These include introductory offers, which enable you to increase your saving rate as the monthly interest payments are reduced. You also get to benefit from balance transfer tools that are designed to make your debt transference into the one account easy. In addition, you are exempted from maintenance and annual charges, and you get cash back. Use a balance transfer calculator to gauge the savings you will accrue upon transferring the debts, and apply for the card that lets you save the most.
You will be issued with the 0 balance transfer credit card before your credit-worthiness is compromised. It is, therefore, quite unfortunate if your credit score is not good or excellent. You will then have to use either or both of the other two ways of credit rebuilding.
Your second strategy for fixing your poor credit report should be to use credit unions and credit cards. When you have already been declared as bankrupt, you will be issued with a bankruptcy discharge by the bank. Go to a credit union or bank that offers secured credit cards and apply for one. You will have to provide some cash and the bankruptcy discharge, and the facility will give you a credit limit that is equivalent to that cash.
Tread cautiously here because some facilities may charge outrageous upfront fees. The amount you will be charged for opening the secured card will be deducted from your credit limit. You may, therefore, find yourself having a quarter or half of your credit limit gone before you have even made your first purchase. You must also ascertain that the bank or credit union will submit your card report to the major credit bureaus.
You are likely to start with a low card limit. With time, you will be allowed to increase the amount you deposit and therefore get an increased card limit. The more your limit rises and the lower your balance is, the faster the rate of your credit score improvement. The same case applies for unsecured credit cards.
The third way is getting secured and unsecured loans. Many lenders shy away from lending money to people with bad or no credit history, but you will still be able to find those who provide secured and unsecured loans. You will pay higher interest rates that the market rates, but you have the opportunity to make a full repayment and thus restore your credit. With a good credit score, you will once more be a beneficiary of the best credit offers in the industry.