A low credit score happens when there are missed and late payments or credit report errors. Whilst the latter can be resolved relatively quickly, credit score improvement due to a poor repayment history takes far longer. Much depends upon the severity of the transgression and how proactive the individual is in terms of doing what is necessary to fix adverse credit. Contrary to the claims of some advertisers, it is not possible to repair credit quickly or get a new credit report.
Poor Credit Repair Help
A credit report is intended to provide the lender with a snapshot of the customer's reliability in order that they can assess credit worthiness and decide what rate of APR to charge. Whilst it may be possible to recover from a missed payment in as little as 6 months, chapter 7 bankruptcy will show on a credit report for a period of 10 years.
It will also need to be revealed to future employers. No matter how poor credit is, fixing credit is achievable. Even following chapter 7 or repossession, it may be possible to qualify for a mortgage in as little as 3 years.
Reliable Repayments to Achieve Credit Score Improvement
Poor credit isn't terminal and can be recovered from over time. If this wasn't the case, there would be no incentive for the borrower to make future repayments. Qualifying for credit is an important incentive as it improves affordability and allows people to achieve their dream of home ownership.
Lenders will advise credit reference agencies whether future repayments have been received on-time at month end. Paying back debt punctually now and in the future will help with bad credit repair as they are indicative of greater reliability and maturity on the part of the borrower.
Repairing Credit with a Bad Credit History Credit Card
The ideal situation is to be making repayments on a minimum of 2 forms of credit - fixed repayment and revolving debt. Not everyone has an active source of revolving credit once they have entered a debt settlement program, debt management plan or filed for bankruptcy.
Whilst many insolvents continue to make repayments on a car loan or mortgage (reaffirmation of debts), a credit card for poor credit can provide an invaluable source of help. Each timely repayment will assist with fixing credit as scores will go up slightly at the end of each month.
Fixing Credit Report Errors
Just like any other data source, not all the information held about the individual will be accurate. Before applying for a loan, credit card or mortgage it is important to get hold of a free credit report and check this for erroneous information.
The onus is on the individual, not the lender or credit reference agency, to identify and correct any problems through the agency. Should there be an error, it is possible to amend the information personally or with the assistance of a credit repair attorney under the Fair Credit Reporting Act. The appropriate supporting information will be necessary.
Don't Make Too Many Applications for Credit
Avoid making multiple applications for credit as each search for a loan, credit card or mortgage will show on a credit report for a period of 12 months. Too many applications will be perceived as a sign of potential financial difficulties or even fraudulent activity. If an adverse credit history is an issue, apply for appropriate financial products from the outset.
Poor Credit Restoration Takes Time
Unless data is inaccurate, repairing poor credit takes time and isn't something that happens overnight. Seek to commence credit score improvement sooner rather than later. The earlier the credit repair process begins, the sooner scores will start to get better.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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