If you are like many homeowners out there facing foreclosure then you may have figured out that your credit is being destroyed. Being late on mortgage payments can drop your credit score as much as 90 points, and that’s just for one month late. Wow is right; 90 points can be a hug drop and can really hurt you from getting loans or good interest rates. I believe the credit system has its flaws and everyone comes under hard financial times once in a while but knowing what to get back on your feet and build that credit score back up is key.
Why is it important to have a good credit score?
Having a good credit score shows lenders that you are trustworthy and responsible with money. If banks trust you with their money, there are endless possibilities you can do with it and an endless amount of money available for you. When applying for loans, credit cards, or even insurance a lot of companies use your credit score to determine your dependability.
So what determines my score?
There are a few main factors that make up your credit score. These are previous payment history, which includes your credit cards, auto loans, home loans and just your history of making payments on time or lack of making payments. The next is your outstanding debt; this is just how much you currently owe, and how close you are to your limit. Borrowers want to make sure you can afford to pay your bills and pay them.
Another is the amount of time you have had a credit history. If you keep good credit over time it will just get better. Also they want to know what type of credit you are using and how many times you have sought new credit.
How do you start to rebuild your credit?
Rebuilding will not happen overnight, there is no quick fix system. There are some things that you can do that will help to get it back up.
Pay your Bills on time
Yes this is pretty obvious, but can help your credit score go up and stay up more than anything else. Late payments have some of the largest negative effects on your credit. Develop a good habit of paying on time.
Paying down debt
If you have credit cards that are maxed out or even over the limit. Start slowly paying down the debt. Start first with the accounts that have the highest interest rate. Even call the banks and see if you can get your interest rate lowered.
Do not open lots of accounts
Having tons of credit cards that are all maxed out will hurt your credit. Just have one card from each major company if you need more than one card. Don’t go over four cards. Also do not open department store cards to build existing credit. They will not help much if any at all.
Fix any errors on your credit report
Errors can have the biggest negative impact on your credit score. You can check with the credit reporting bureaus to find any errors and ask them how you can get that off your credit. Credit bureaus have no legal power over you; they are not run by the government and are just normal businesses. Around 80% of credit reports have mistakes on them. So check yours today.
These are just some simple little tips to help get your credit up. There are tons of articles all over online to find more about fixing your credit. If you have a house that is unwanted and a payment that is hurting your credit, you may want to consider selling your house and getting the monkey off your back. If you are located in Billings Montana contact Big Sky Property Solutions LLC to find out some of your options. They have solutions for every situation out there.
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