Autostar USA Tips: Rebuild, Repair Bad Credit
Autostar USA Tips: Rebuild, Repair Bad Credit
The following article contains tips on how to rebuild or repair a bad credit score and is titled Autostar USA Tips: Build, Improve Credit Score. If you arrived here in error you can click here to view our massive inventory or give us a call at (800) 680-0835. If you prefer email or text you can reach out to our World Class Internet Department with this form.
In this article, Autostar USA Tips: Rebuild, Repair Bad Credit we’re going to share some tips compiled from our team and around the internet. Our goal in doing so is to assist those people who know they have a bad credit score and would like to do something about it.
Autostar USA Tips: Rebuild, Repair Bad Credit
Since this is a post about rebuilding and repairing bad credit it is very important to note that there is no overnight fix or big secret for quickly repairing bad credit. Starting from zero, good credit takes a while to build. When you have bad credit it will take some time as well. The good news is that it’s not impossible by any means. What you have to do is kick your bad credit habits in favor of good credit habits. Since your credit score is a reflection of your credit history, all you have to do is put the work in in the beginning and then maintain it. Do that and your credit will swiftly be on the mend.
Autostar USA Tips: Rebuild, Repair Bad Credit – What you can do
- It may not be pretty to look but it is said that “knowing is half the battle”. The first thing you need to do is make sure you understand where you are now. If nothing else it will help you steel your resolve to do something about your credit situation. You can get a free credit report annually from each of the three major bureaus at http://annualcreditreport.com . You will have to pay for your score if you’d like to know that as well which we recommend you bite the bullet and do. The fee to obtain your credit score is set by the Federal Trade Commission (FTC) and is usually $7.95. It’s important to note the Fair Credit Reporting Act and the Wall Street reform bill here. Under the Fair Credit Reporting Act a consumer is entitled to a free credit report within 60 days of any adverse action (i.e. “subprime” credit terms, being denied credit, etc) taken as a result of their credit score. The Wall Street reform bill allows a consumer to receive a free credit score if they are denied a loan or insurance due to their credit score.
- Dispute anything that might look suspicious on your credit report immediately. Also make sure that all the information on your credit report is 100% accurate. Make sure that there are no accounts that aren’t yours on your credit report. Also take special note of any accounts that are past due, in a “charge-off” status or have been sent to collections and anything that is maxed out as these are some of the largest red-flags you can have.
- The next thing you should do is lay out your plan of attack. You’ll want to pay off your problem areas strategically so as to minimize further damage to your credit and even help improve it right off the bat. Payment history makes up about 35% of your credit score so it’s the most important place to start. Prioritize your problem areas as follows:
- Get current on accounts that are past due but have not yet been charged off. Charge-offs are to be avoided as they’re one of the worst statuses you can have working against you. After 180 days of delinquent payments most accounts are charged-off. Call your creditor and explain the situation asap as most are willing to work with you to help you avoid that situation as long as you’re showing that you’re trying to get them the money they’re owed. Keep in mind that the people you’re borrowing money from are people as well and it’s inconvenient for the person to have your account charge-off and looks bad to consumers when an institution has a high percentage of accounts that default.
- Pay accounts that are already in charge-off status. You are still responsible for balances on accounts that are in charge-off status. New charge-offs will hurt your credit more than old ones that have already done the bulk of their damage (hence your highest priority is to keep new accounts from hitting this status). Charge-offs will stay on your credit report for the full seven years so it’s important to prevent them from happening in the first place. Some creditors will accept a settlement for less than the original balance to settle the debt. Settlement status will show on your credit report and stays for seven years as well. Once you’ve got a handle on your debt and see things improve the way you want you could also try to pay the creditor to delete the charge-off status from your account. This is not easily done however and should be considered a bonus once you’ve got everything else caught up or ahead.
- Take care of collection accounts. Most of the time these accounts have already had their damages done but you are still responsible for the balance. It usually takes several months before an account gets to collections. Some accounts that wouldn’t normally be reported will go to collections so it’s always best practice to pay your bills on time.
- Once you’ve got the major red flags taken care of you need to prioritize which accounts need the most TLC (read:money) sent their way to help turn your credit history around. The next thing you’ll want to start doing is bringing high account balances below your limit. This is referred to as your “credit utilization” and too much is definitely a bad thing here. It compares your total debt to your total credit and is responsible for about 30% of your credit score. The closer your loan account is to where it started the worse it is for your credit and credit cards are more heavily weighted than other accounts so prioritize these.
Autostar USA Tips: Rebuild, Repair Bad Credit – What you should NOT do
Just as important as what you SHOULD be doing above, we’re going to go over some things that you should not do here. A lot of the things below are either knee-jerk things that people try to do to try to alleviate some of their issues that are contrary to how the credit system works or misinformation that has been spread that will do more harm than good.
- The largest mistake made is not working on repairing your credit at all. This will always lead to a worse situation. Do not ignore your bad credit score/history!
- Similar to the above is not checking your credit report. You will have to custom tailor your plan to where you are and every situation is unique. Make sure you know where you are so you can apply the information you get here effectively!
- A lot of credit repair companies will shotgun and try to dispute anything and everything on your report. This will make any disputes that need to be made much weaker and could even result in some of your good credit history being removed and further hurting your credit score and history. Do not make this mistake! Pick and choose what to dispute and only dispute things that are inaccurate. Be responsible.
- When the FTC issues a statement saying that it’s never seen a legitimate credit repair company it’s wise to NOT hire a credit repair company. They often make promises they aren’t within their legal rights to fulfill. Furthermore, nothing they offer cannot be done yourself. You will save yourself time, money and probably a great deal of hassle and credit history if you do it yourself.
- Transferring balances from one account to another. This is actually something a lot of people do to try to avoid late fees but it not only postpones the inevitable but even makes the amount you owe continue to climb, especially as interest is added time after time. Do not play the “balance transfer game”!
- Similar to the transfer game is missing some payments in order to pay others. Skipping payments to make others is not a wise thing to do. We’ve already gone over how payment history is a large portion of your score so vow to not miss any payments, even if all you can do is pay the minimums. Here’s a great list of things you can do to pick up “extra” money in your budget so you can make your payments.
- Cutting up cards or closing existing credit card accounts. There are a few exceptions to this rule, but as a general closing accounts (especially those with good history) is ill-advised. Closing a credit card account will not ever do anything to increase your credit score, it will even hurt it if it’s one of your older cards that you’ve established a lot of your history around. A lot of people do this because they don’t trust themselves with credit but the credit habits established are to blame and not the piece of plastic. Instead of doing this learn to use a credit card the right way. Specifically:
- Only borrow what you can afford to pay
- Use a small amount of your available balance
- Pay your credit card balance in full and if you carry a balance do it the right way by making all your payments and paying more than the minimums each month. Just make sure to keep it below 30% of the available credit limit.
- Let your accounts age. The longer you have credit the better it is for your score so long as it follows the above guidelines.
- A lot of people will advise you to file bankruptcy. This is a terrible idea! Bankruptcies will stay on your credit history much longer than other credit does. This can even make your credit worse and in the meantime you will still have trouble applying for credit cards or loans. Even if the bankruptcy has come off a lot of creditors will ask if you’ve ever had a bankruptcy and double-check you so it can and most likely will hurt you in the long run.
Autostar USA Tips: Rebuild, Repair Bad Credit – Building good credit habits
Once you’ve got your bad credit history handled the thing to do is start building good credit history to really help your score improve and prevent you from getting back “in the hole” so to speak.
- You’re going to need to reestablish your credit and that only happens by opening up new accounts and handling them appropriately.
- Make sure that you ALWAYS make payments on time and remember that making more than the minimum payment is always advised.
- Keep a budget and do not bite off more than you can chew. Only open credit lines that you know you can afford.
- If you find it difficult to get approved for an account initially, consider a secured credit card. They require you to make a security deposit to get a credit limit which makes lending institutions much more comfortable. This is often the best place to start as you want to avoid too many credit inquiries.
- Leverage your annual credit reports to guard your credit score.