Managing Your Bad Credit History

Tyron is thinking about his bad credit

Do you need to brace yourself for some facts about bad credit loans with regard to your credit if you have made some financial mistakes? Before hitting the panic button, try to assess how bad your credit actually is. Sometimes, bad credit items are on your report that should not be there. Challenge them and have them removed.

Some Bad News

Bad credit issues you had in the past because of wrong choices and led to bankruptcy or garnished wages are almost impossible to fix in the short term. If you have a medical emergency on your hands, you may still be able to find a lender, but it’s going to cost you. Lenders in the area of bad credit are going to put you in the high-risk category with a high-interest rate. They do that to offset the risk that the loan amount may not be paid back on time.

Car Loan with Bad Credit

You will probably have to place a big deposit if taking out a bad credit car loan. Interest rates might be from 19% to as high as 30%. To get the best deal, call several lenders and opt for one with the lowest interest rate and other loan terms are about the same as the others. Prompt, on-time payments will work towards improving your credit score.

Personal Loan with Bad Credit

There are a few sources that will provide a loan but again, interest rates will be high. Payday Loans, for example, carry enormously high rates of interest calculated over a short term because the loans are designed to be repaid on the next payday.

Cleaning up bad credit items

Fix errors in your credit report The worst case scenario is not being able to find a lender at all who is willing to risk lending you money. You could wait a few years until the bad credit issues drop off your report. Or, you can try to clean up the bad credit mess and gain a few extra points that might get you over the line with a lender or two. Bad items on your credit report that are old should be removed. Inform the credit bureaus to request their removal. By law, they should be corrected.

Silly mistakes can be made on your credit report, such as a typo in a social security number. Until you check your report, you will never know whether you are carrying somebody else’s court record or bad payment history.

The good news

Any bad accounts that you actually paid off, but don’t show on your report should be corrected. Present proof of payment to the credit bureaus. The few points added to your score can make a hell of a difference.

A word of caution

Be careful about who you listen to if you ask advice, particularly from family and friends. Unless they are working in the credit and financial industry, they really won’t know.

Your credit cards can work against you or work for you. If you have been making payments, then this increases your score. If you have too much debt to earnings ratio, and a couple of newer credit cards can be closed, then do so.

A good point to remember is if you are able to finally secure that loan, then starting from that transaction, timely payments and managing that account properly will start the journey of repairing your credit.

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