If you've had trouble getting a credit card or if you have a lack of credit and debts from the past, you need to put together a plan to repair your credit and build your credit. You can accomplish these two things at the same time and neither of them has to cost you a lot of money.
When you repair credit, you'll first need to get your credit report and credit score. It is not a bad idea to go ahead and pay for your score because your credit score is the gage of your credit profile. When you know your credit score, you know what the lenders and creditors will think of your profile without even looking at the report. There are certain cut-off scores that creditors and lenders will not go below. Currently in the mortgage industry, most lenders will not lend to any person whose score is below 620. This was not always the case. It wasn't very long ago that some lenders would go down to 500. There were a lot of different programs for different credit scores. The credit market is a market that is always changing and no doubt, the score requirements will change again soon for better or for worse.
Now, if you are trying to repair your credit and build your credit because eventually you want to get some sort of loan, you have to first know where you are starting from. Find out your credit score.
After you've gotten your report and you know what is on your report that is hurting your profile, you can address these items with your creditors. You may need to pay some things off. Maybe you already paid something off but your credit report is showing it as unpaid. Maybe there is an account that is your sister's or father's because you have a similar name or social security number. You simply need to read through the report and mark the items that are a problem for you and handle them either directly with the creditor or through the credit reporting agencies by sending credit dispute letters.
Building credit is not that difficult anymore. There are plenty of secure credit cards available for credit building. Yes, most of them may cost you a bit. But the cost will be worth it in the end. Nothing worthwhile comes for free, as the saying goes Think of it as buying your credit. It is as simple as that. Another option is to use your bank if you have a good relationship with them and if they will report to the credit bureaus. If they donít/wonít report, donít waste your time. If they will report, they may do a secure loan with you on your car title or on a deposit. Generally, this is a pretty smart and inexpensive way to build credit. But, many small banks donít report to the credit bureaus. Some of the larger banks donít want to deal with this kind of business. You have to build a relationship. A lot of banks, even bigger ones, still value human relationships and they will consider you as a person. Remember to dress for success when building this relationship!
These are tips I have imparted to many of my own clients, and I know from their testimony that they can be very effective.
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