Long Term Loan with Poor Credit Score Durban South Africa
July 4, 2018
Bad credit is like being overweight which is not easy to improve and takes a few efforts and time. Building credit that is not good credit score is not particularly a quick or simple process. And this is more likely that any effort to quick fix the credit score would backfire, so one should be careful when one takes some professional advice for that.
As anyone wants to improve on credit score and start the process, one thing should be kept in mind that it is like a marathon, not a sprint. The best advice for rebuilding credit is to manage it responsibly over time. If you haven’t done that then you need to repair your credit history before you see your credit score improvement.
Most credit scores – including the FICO score – operate within the range of 300 to 850. The credit tiers generally look like this:
Excellent Credit: 750+
Good Credit: 700-749
Fair Credit: 650-699
Poor Credit: 600-649
Bad Credit: below 600
There are many ways to build a good credit score and it’s worth to make those efforts otherwise bad credit score can cost you thousands of dollars over a lifetime. When you look to improve on your FICO score, you should regularly check your credit report.
Credit score repair begins with your credit report and checks it for errors. It is easy for your credit report from each of the three major credit report agencies. One is entitled to a free copy once a year of your credit report under Fair Credit Reporting Act. These can be seen online also.
Most credit scores range from 600 to 750. Where 750 plus is considered to be excellent below 600 is the bad score.
Rapid rescoring is a practice commonly used by mortgage originators to help improve credit scores. Rapid rescoring is a two-step process that first involves correcting and updating information, and that information is then sent to the credit bureaus. When the rapid rescore is done, this information is added to the consumer’s credit file within days to update and improve their credit scores quickly.
Like we said earlier, improving a poor credit score takes time, but it’ll be completely worth it. Constantly worrying about being approved for loans, mortgages and new credit cards is not something you want to be doing for the rest of your life.
Following these tips will not only save you money but also teach you the valuable skills necessary to maintain a good credit score in your future. If you have bad credit, don’t give up on credit entirely. Instead, be responsible and stay educated about your accounts and scores so you can successfully handle your own finances and find a credit repair plan that works well for your situation.
Some of the tips and steps need to be followed when one starts working on the improvement of credit score.
- Payment Reminders–
Your payment history contributes a major share 35 percent to FICO calculation. Keep checking your credit payment schedule to make sure there is no late payment. Making your credit payment on time is one of the biggest contributory factors to your credit score. Some financial institution offer installments reminder through their online banking portal via SMS or E-mail etc.
Be sure to check Your payment due dates in relation to your paychecks schedule. Ask your lender or credit card issuer if they can provide a rebate on late payment charges. Credit card companies are quite lenient on rebating or exempting penalties if you have a long track record of making payments on time.
Delinquent payments can remain on credit report for up to seven years from the missed or late payment that the credit bureau reported.
- B) Pay your bills on time-
Delinquent payments even if it is only for few days can have a major negative impact on your FICO scores.
The longer you pay your bills on time after being late the more your FICO scores should increase. The impact of past credit problem on your credit scores fades as recent good payment patterns show up on your credit report.
- C) Keep balance low on credit cards and other revolving credits. High outstanding debt can affect a credit score.
- D) Clear up any old collection account- Pay off all old debt instead of transferring it to the new account. Contact the debt collector listed on your credit report to see if they would be willing to stop reporting the debt to each major credit bureau in exchange for full payment.
But just be sure to get that promise in writing before you make any payment.
- E) Don’t close any unused credit score as a short-term strategy to raise your credit report or don’t open many new cards which you don’t really need, just to increase your available balance. As this approach could backfire and actually lower your credit scores.
1. F) Limit Credit application-
Some discount for signing up for a store credit card may seem worth it at the moment but your credit scores will take a hit for applying, whether you get approval or not.
A hard inquiry will impact your credit scores for a full year, though your score will start to improve almost immediately after your application.
- G) Reduce the amount of debt you owe-
Debt contributes 30 % of your credit report scores calculation and can be easier to clean up than payment history. Though this is easier said than done, reducing the amount you owe is going to be a far more satisfying achievement than improving your credit scores.
Use your credit report to make a list of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.
To summarize, “fixing” a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain a consistent good credit history. Raising your scores after a poor mark on your report or building credit for the first time will take patience and discipline.