Your credit card can be severely affected when you have severe financial distress. Bankruptcy penalties in Chapter 7 on your credit report stay present for ten years. Collection accounts and Chapter 13 stick around for seven years. In case you attracted a tax debt due to financial distress, you will be haunted by unpaid tax liens for approximately 15 years. Who wants to wait for that long to rebuild credit? Absolutely no one!
There is a better way; you need to take measures that will help you to fix your credit for you to become financially stable again. Once the debt is behind you, you need to take the necessary steps to rise above debt and four credit so that you can get new financing and advance your life.
We are going to look at five steps that can assist you to improve your credit.
Go for re-aging
When you have an account that turns out to be delinquent, the lender or creditor often reports the status of the account to the credit bureau. Once this record is in place, you get a negative credit report that stays open for seven years.
If you have an account that is delinquent, inform your creditor and arrange for a repayment schedule to cover up the payments. For you to be able to stick to the repayment schedule, ask for re-aging of the account for the late payments and negative status to be removed. Once that is done, you will have to make your payments to boost your score.
Repair your credit
Having several negative items on your credit report is possible. Most of the penalties can be legitimate, and the only way is to re-age if you want to remove them. But on the flip side, not all items that are negative in your report are right. There have been errors made in credit reports that can drag your score.
You can dispute these errors through a credit repair in different ways:
- Hire a company to look at your credit report and make any disputes in your case.
- Purchase a credit repair software to help you recover from your credit.
- Get an online credit free guide to fix your credit.
If you make a successful dispute, any negative item will be removed, if it is hurting your credit score. This will help you to improve your score within a month which is the time the credit bureau will verify information or remove the negative item.
Pay on time
Your payment history is a primary consideration of your credit score since it accounts for more than on-thirds of the score. Although it seems simple, payments have to be made in time to improve your credit ratings. Each payment made on hard money loans creates a positive record in your payment history. So, if you missed payments tainted your record, the payments will offset this record.
It is important to know that the impact of the bad record decreases over time. Although the items stay on your record for some time, it becomes less impactful. Essentially, a recent missed payment can affect your credit score than a missed payment five years ago.
So, if you make on-time payments as frequently, you will fix your credit faster. The same is true even if you have hard money loans.
Don’t close old accounts
Keep accounts that have always been active available. ‘Credit age’ is how long your credit has existed over the years. It is considered a key third parameter in calculating 15% of your credit score. If you close your oldest accounts, your credit age will be decreased which is bad for your rating.
If it is possible, use your creditors to keep your old accounts in good ratings to minimize your credit age and prevent abrupt decreases in your score.
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