How to fix your credit score
The best advice that you need to keep in mind about rebuilding credit is that it’s achievable if you manage it responsibly over time. Are you wondering what is a FICO credit score or looking for efficient ways to improve your scores for better access to credit services? Fixing bad credit or sustaining a good credit requires patience and discipline, especially if it’s your first time. There are no quick ways to fix your credit score organically, so be cautious of any advice that claims to quicken the process for you, as they are highly likely to backfire.
What is a FICO credit score?
Fair Isaac Corporation (FICO) is the oldest, and by far the most trusted credit score provider. More than 90% of businesses rely on FICO credit scores to determine a client’s creditworthiness. Whenever you seek for any credit solution, your lender will refer to your credit scores, a number typically within 300 to 850. This number depends on the information found in your credit report. Anything above 720-850 is an excellent score; 690-719 rated as good; 650-689 rated average; 600-649 considered to be poor while anything lower than 600 is bad credit. To improve your FICO credit scores, you need first to identify any existing errors in your credit history and fix them.
Get a secured credit card
Poor payment history leads to bad credit scores in most cases. A secured credit card allows you to prove you have better payment habits even though you cannot do so by traditional ways. You can take advantage of companies that give you a credit card despite the bad credit. Ultimately, a secured credit card works exactly like a regular credit with the exception that the credit provided by the credit card company is guaranteed and equal to the amount you will have sent in as a guarantee. Although these cards may be basic and not highly rewarding in terms of perks, they can help you rebuild your credit. The following are some best secured credit card options based on their rates of approval and costs of credit: The Capital One Guaranteed Secured MasterCard and the Capital One Low Rate Guaranteed Mastercard a both good options offering guaranteed approval albeit with a hefty annual fee of minimum $59. The definite best option for people that want to improve their credit score is Refresh Financial Secured Visa Credit Card. It promises a guaranteed approval, comes with an annual fee of only $13 and has a low interest rate of 18%. However, don’t forget that you intend to better your credit scores. Thus do not use your card to get into more debt. Also, only use a credit card if you are very sure you need one.
Debt reduction services
Debt reduction companies negotiate on your behalf with creditors to reduce the sum you owe, typically on unsecured debt including credit cards. Mortgages on houses or cars that whose ownership can change are not eligible for settlement. Although most companies do not reduce federal student loans, you can opt for an income-based repayment plan in case student loans are a struggle for you. Settlement offers are only acceptable if it is apparent that you might not pay at all, so you can stop making payments on the debts you owe. Instead, you set up a monthly savings account with the company, and as soon as it believes the account has enough money to offer, it negotiates with the creditor to accept a smaller amount. A well-known canadian company that can easily direct you to a debt reduction service in any area in Canada is Debt.ca. They have many debt relief options that will help you make an informed decision on what is best for you.
Debt consolidation loans
Debt consolidation means combining all your unsecured loans into one monthly payment. Debt consolidation can help to do this by paying off all your debts, then all you have to do is settle the new consolidation loan instead of dealing with the many creditors. You can get a debt consolidation loan from your bank, or on your own through a home equity loan. Alternative lenders such as Fairstone Financial are far more easy to Apply with and have better bad credit loan approval rates compared to traditional banks. Although this method does not reduce your debt, it lifts off the burden of having to pay different creditors separately. Watch out for the new interest rate, as a consolidation loan is only beneficial when the interests and the costs of loan repayment are lower.
The key to maintaining an excellent credit score is by clearing your debts early. However, if you have a poor FICO credit score, you can get help to rebuild it. Debt consolidation helps you to easily manage all your debts, while a debt settling company can help you to waiver some percentage of your outstanding debts. A secured credit card allows you to build your credit with only a small deposit. As long as you stay dedicated to the process and identify opportunities of increasing your credit score, you will succeed and enjoy the benefits of an excellent rating. This practice might require some time, but in the end, it’s all worth the effort.
If you have any questions or comments, feel free to leave them below and I will be more than happy to continue the conversation with you.
All the best,