Credit scores can easily become a catch twenty-two situation, where the worse, or lower, your score is, the more you will be charged for loan rates.
You will also pay more in interest fees.
But don't despair! You CAN improve your bad credit and qualify for better rates.
Best of all will be the peace of mind that comes with taking charge of your financial history.
What is the first thing you should do to repair your bad credit? First of, you will need a copy of your FICO score.
They are available from one of three certified companies and you may request a free copy once a year from each of them.
They are Experian, Equifax, and TransUnion.
It is important to know that because additional requests can actually hinder your credit history.
Any time you apply for a loan or credit, the institution you apply to will also investigate you.
Don't forget, knowledge is power! Even if your FICO score is lower than you would like it to be (below 620 on a scale of 300 to 850 is undesirable) now you have the tools to remedy your situation.
Credit companies look whether you pay the minimum punctually or not, and if late payments or non-payments are habitual or an exception.
With copies of your FICO scores in hand, carefully go over every line to assure yourself that there are not mistakes.
You have every legal right to dispute inaccurate charges as well as charges that were paid on time, but not recorded accurately.
Once you feel that what you have in your hands reflects your real-life situation, you are ready for the next step.
Second, print out or open all bills from loans, major credit cards and any other debts you are paying off.
Ouch! This is actually the most painful part, and where most bad credit comes from because for some people, it is so painful to look at their debts that they never open their bills and don't look at the on-line pages.
If you are nodding your head at this point, you are not alone by any means.
Time to do something about it! Your credit score also is partially judged by how much you currently owe compared to the total line of credit that you have.
In other words, if you are maxed out on a bunch of cards, you will likely have a low score.
This is NOT the time to apply for more cards, nor is it the time to cancel any ones that may be totally in the clear.
Good for you if you have any debt-free cards.
Put those away in a sealed envelope for the moment and don't touch them again until you are in a better spot financially.
Now, you will want to see where you are hurting the most, credit wise.
Your goal will be to lower the ratio of debt to credit allowed on the card with the highest ratio.
(Remember, credit scores look at what you owe compared to the credit you are permitted.
)Organize your card statements from greatest debt ratio to lowest.
If they are all maxed out, choose the card you owe the least on, and then ones you owe more on, etc.
Make sure you pay the minimum on all your cards every month, but on the card you chose to focus on, pay as much as you can afford to each month until you pay off that debt.
Then start in on your next card.
Remember to pay the minimum each month on all your cards.
To avoid further debt, leave your cards at home and pay with cash whenever possible.
Soon you will be on the road to a better credit rating!