Bad Credit |
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If you have bad credit, you may feel there is no way to repair your credit score. You may not even know what caused your bad credit to begin with. The first step is determining what bad credit is. Everyone who has ever taken out loans, or credit cards, has a credit score. This three digit number, between 300 and 850, is the most important factor that lenders consider before giving you loans. The higher your credit score, the more likely you are to get credit, or to get a better interest rate on loans. Different creditors have different guidelines for what counts as good or bad credit but the higher your score the less likely it is to be seen as bad credit. Most people earn bad credit by not paying their bills on time. If you've been out of work due to sickness or unemployment, you may have been unable to pay your loans. Unfortunately, your credit report doesn't show possible lenders if you have a reason for not paying your bills and lenders usually feel there is no excuse not to pay bills. They need to feel secure that if they grant you loans they will get their money back. You can earn a bad credit score for several other reasons. Any time you apply for loans your credit report is pulled up by the possible lender, and each of these inquiries is marked on your credit report whether you are approved for the loans or not. Ultimately, having too many inquiries on your credit report will adversely affect your overall credit score. If you have missed several payments on a credit card sometimes the lender will 'charge-off' your debt. This means that they have decided you are not going to pay off your loans and they close your account with a balance. These charge-offs are reported to the credit scoring companies and remain in the negative section of your credit report for seven years. Sometimes credit card companies will offer you a deal on loans you have stopped paying, offering to excuse the rest of your debt if you pay them a portion of it. While these deals can sound like a dream come true what many loan lenders do not tell you is that these also count as charge-offs and can add to your bad credit score. Foreclosures, bankruptcies, and repossessions all add to your bad credit and are warning signs to other lenders. However, just because you have bad credit doesn't mean that there is nothing you can do to improve your score and get more loans, at better rates, in the future. There are many companies that can help you work with your lenders to pay off debt before it creates bad credit in your name. You may be able to get home equity loans to help consolidate your debt into one easy payment with a lower interest rate. If you are not a homeowner, you may still be able to consolidate your debt. |
