A credit report is an evidence of your financial health and ability to pay. Hence, a bad credit report is damaging to your financial position. An important repercussion of a bad credit report is that lenders will be uneasy to extend credit. Moreover, such applicants have to bear higher interest rates for accessing credit.
How to Avoid a Bad Credit Report
Follow these strategies to avoid a bad credit report:
• Timely bill payment: Payments later than 30 days from the due date lowers the credit rating.
• Minimize credit card usage: Keep a limited number of active credit cards and also minimize their usage. Communicate closed credit card accounts to credit-reporting agencies.
• Avoid bankruptcies: A bankruptcy record stays on your credit report for at least seven years. It is the most damaging parameter to your credit rating.
• Evade tax liens: Unpaid federal and state property tax or income taxes have negative repercussions on the credit report.
• Lower credit limit: Request your creditors to lower the credit limit on your account(s). This is because lenders consider the total amount of available credit even if you do not owe them anything. Higher available credit limits tend to worsen credit report.
• Timely bill payment: Payments later than 30 days from the due date lowers the credit rating.
• Minimize credit card usage: Keep a limited number of active credit cards and also minimize their usage. Communicate closed credit card accounts to credit-reporting agencies.
• Avoid bankruptcies: A bankruptcy record stays on your credit report for at least seven years. It is the most damaging parameter to your credit rating.
• Evade tax liens: Unpaid federal and state property tax or income taxes have negative repercussions on the credit report.
• Lower credit limit: Request your creditors to lower the credit limit on your account(s). This is because lenders consider the total amount of available credit even if you do not owe them anything. Higher available credit limits tend to worsen credit report.
How to Repair a Bad Credit Report
Though a bad credit report can not be erased completely, it can be gradually improved by following these strategies:
• Practice debt consolidation: Acquire a new loan having a lower or fixed interest rate, to clear old debts. Minimize the number of active credit sources.
• Take co-signed loans: Acquire co-signed loans or credit cards with your friends or relatives to finance your operations and to re-establish your credit.
• Create a better debt mix: Include both secured and unsecured debt credit sources to balance your credit mix and repair your credit rating.
With a large number of credit repair schemes available online, it is possible to create a new credit identity by hiding bad credit. However, such an attempt to hide bad credit report is called ‘file segregation,’ which is a federal crime. A large number of dubious service providers guarantee complete removal of a bad credit report in exchange for a fee. However, they simply aid in applying to the Internal Revenue Service for an Employer Identification Number (EIN), which can be used in place of the social security number. By these facts, it is clear that a bad credit report cannot be hidden. The only alternatives are repairing the situation or evading it altogether.
• Practice debt consolidation: Acquire a new loan having a lower or fixed interest rate, to clear old debts. Minimize the number of active credit sources.
• Take co-signed loans: Acquire co-signed loans or credit cards with your friends or relatives to finance your operations and to re-establish your credit.
• Create a better debt mix: Include both secured and unsecured debt credit sources to balance your credit mix and repair your credit rating.
With a large number of credit repair schemes available online, it is possible to create a new credit identity by hiding bad credit. However, such an attempt to hide bad credit report is called ‘file segregation,’ which is a federal crime. A large number of dubious service providers guarantee complete removal of a bad credit report in exchange for a fee. However, they simply aid in applying to the Internal Revenue Service for an Employer Identification Number (EIN), which can be used in place of the social security number. By these facts, it is clear that a bad credit report cannot be hidden. The only alternatives are repairing the situation or evading it altogether.