We all know the price you pay when you have bad credit: higher interest rates on your loans, higher insurance premiums, and maybe even less of a chance of getting that new job (yes, potential employers might check your credit report). But you have good credit, right? Maybe not. Here are three symptoms that your credit rating may be less than stellar.
Symptom #1: High interest rate on a re-fi. Your home mortgage has a balloon payment coming up. When you got the loan, your lender said you could just refinance when the time came. Well, the time has come, but now no lender will offer you a decent interest rate for refinancing your mortgage. It might just be a sign of the times (the credit crunch), but it is more likely that lenders have seen your credit report and they are not impressed.
Symptom #2: A ringing telephone. And it's not your girlfriend, and it's not a "courtesy call" from your credit card company. It is another one of those debt collection companies trying to track you down. If it has gotten to the point where you don't even want to answer the phone anymore because you assume it's another debt collector calling, you have bad credit!
Symptom #3: Small lenders won't help. You have visited all the storefront lenders in your neighborhood, and even they have given you the cold shoulder. They think you are a poor risk, based on your FICO score. The only small lender that will front you cash is the "pay-day loan" store. Ouch! When you are paying 300% to 700% APR, you know you are in deep financial trouble.
Symptom #4: Even your mother won't loan you money. This is a sure symptom that your credit problems have gotten out of hand. If your own flesh and blood knows that the chances of getting repaid is slim, it is time to do something about your bad debt.
It is not impossible to repair a bad credit rating. It may take time and effort, but you can do it yourself. You will need a resource of information to point you in the right direction. There are manuals you can buy that provide proven techniques for raising your credit score. They will tell you how to obtain copies of your credit reports (there are three of them, each from a different company), how to remove incorrect information, and how to add new, good credit to your report.
Some publishers offer automated dispute letters that will speed up your debt repair efforts. There are methods for increasing your credit limit-that always has a positive impact on your credit score. Don't forget the most basic step you can take for improving your credit; start a realistic plan for paying off your debt. Even if it means not taking a vacation or eating meals at a restaurant less often, the more extra cash you can apply toward your debt right now the better. But, don't pay off your cards each month-it's actually better to leave a little balance so the lenders know you can handle credit.
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