How to fix bad credit - 4 Step Process

By having bad credit financial situation, you might have finance options that are not completely gone, but they might well be greatly reduced. To the average loans lender, a consumer or potential borrower with bad financial situation is a credit risk. It may seem intimidating and even frightening, and not a task you want to face, but it is still possible to rebuild your bad credit rating. Here are some tips to help you get out of bad financial situation and soon, be financially sound.

1. Correct Mistakes on Your Credit Report. One in four credit reports have errors or mistakes of some kind. Such mistake as a misspelled name might have implications on the rest of your report as there may be black marks that have been incorrectly assigned to you. These errors or mistakes might affect your credit rating, therefore it is important to change them as soon as practicable, even though the problem is not yours. This is the soonest and safest way to fix your credit report and help to restore your credit rating if by way of mistake your credit rating was deteriorated.

2. Cancel Your Credit Cards, Leave Just Necessary Cards. Credit cards are your quickest and definite way to getting bad credit rating. Missed payments reflect badly on your credit report rating. It is a general practice among people to pay off their debt completely and then end up accumulating the same debt again within a year. You must be careful when choosing right credit card for you, only when you need it very badly, as some credit cards, especially store cards, carry very high interest rates, therefore there are more chances for you to find yourself in debt and possible decrease you credit ranking, as a result. Consequently, credit cards can get you into real trouble if you are not disciplined. Cut up these credit cards and store cards if you want to repair your credit and even improve it. Generally infringements take about two or more years to be removed from your credit report; hence you do not want to increase your chances of creating another infringement and starting the whole process all over again.

3. Pay Off Your Existing Accumulated Debts and Clear Debts Noted on Your Credit Report As Soon As Possible. It is very unlikely for your credit report to improve if you have serious contraventions or infringements still outstanding. There is an urgent need to take necessary steps to pay the debt off; alternatively you can visit a debt counselor who can arrange for the debt to be negotiated or reduced. If you take above steps to clear your debts and fix your credit record you are on the road to fixing your credit and even improving it.

4. What You Can Do With Bad Credit. One of the major consequences of having a bad credit is the fact that it limits your borrowing options greatly. Alternatively, if you have a solid credit rating there are great numbers of borrowing opportunities that are opened to you. Better your credit is, better conditions of lending and better interest rates you will be offered. There are not that many lenders who specialize or diversify their services so to provide their products to those with a bad credit rating. That can be explained by stating that lenders are reluctant of taking additional risk, procedures of credit granting are cumbersome, and there is high level of risk involved. However, there are still moneylenders available who specialize in lending to people with poor credit rating. But it is still worthwhile to do your homework by researching these lenders thoroughly as among them will be those whose terms of lending may put you in a worse position as interest rates are often higher and terms of repayment may be at the limit of your serviceability, but others might still give you a good deal!