Many people suffer from poor credit ratings. Having zero credit or a bad credit rating can keep you from buying a house, leasing a new car, or getting the funding necessary to start up your own business. The good news is that, with some vigilance and patience, there are steps you can take to get your credit back on track so you can make your dreams a reality.
Get A Credit Report
The first step to repairing your credit is to get a credit report. Federal law permits you to get your credit repopts from the three major credit reporting agencies for free once a year (www.annualcreditreport.com). A credit report will detail any outstanding debts and those companies or institutions that are owed money. You can contact these organizations and set up payments to eliminate that debt, or work with a credit agency to consolidate your debt in order to make regular payments on a monthly basis to wipe out those outstanding figures. Occasionally, you might see a charge that you cannot account for, in which case, you can contact the company or bank you owe money to and dispute the charge, or at least get a history from there records as to why it appears on your credit report. Remember, your outstanding debt comprises 30% of your credit score, and the sooner you can pay off creditors, the sooner you will improve your credit rating.
Secured Credit Cards
Think of a secured credit card as an additional debit card. You can get a secured credit card through your bank, typically with a limit on it of $300. The idea is to use the secured credit card for purchases and then pay off the balance on the card as soon as possible. This greatly helps to increase your credit score, and after a period of time, you will be eligible for a non-secured credit card, which you will be able to pay off on a monthly basis.
Open A Second Bank Account
On the surface, opening a second bank account might seem counter-intuitive if you are trying to repair your credit rating. However, using one account for your monthly expenses (bills, food, rent, etc.) while piling extra money into the second account will allow you to pay off debt with the money in the new account. The second benefit to this is that you will be living according to a budget, and any money outside of that budget will be going to pay off your creditors – soon, you will see your debt disappear and your credit score starting to improve.
Get Settlement Letters
As you pay off creditors, request settlement letters. Settlement letters are statements that you have paid off your outstanding debt in full, and that you owe nothing more. These are not only proof for your records that you no longer need to worry about owing any money to those particular creditors, but they can be used in your favor should those charges show up on a credit report in the future.
Work With The Experts
If you want to repair bad credit, or if you want to improve your current credit score, then talk with a professional at your bank or credit agency. They will be willing to work with you to come up with a plan to get your credit score back on track. The worst thing you can do when faced with poor credit is nothing, and having a good credit rating will help you get the things you want out of life.
Need to know your business credit score? Find it here: bQual.com