5 main mistakes when trying to solve a problem with a loan
If you have opened too many credit lines, you should act with the utmost discretion, without making hasty steps that can only harm the situation.
In the event that your credit rating has significantly decreased, you must carefully check your credit history and determine a plan of action to improve the rating.
What mistakes should be avoided?
A very common mistake people do not always check their credit reports. This should be done regularly. In addition, when it is possible to receive free reports from each of the three bureaus that provide online credit reporting through the website AnnualCreditReport.com.
Search for errors
Every fifth consumer faces at least one error in their credit reports, according to a study by the Federal Trade Commission for the 2012 year. That is why it is necessary not just to run through the figures contained in the documents, but carefully check them for the content of errors. If you find something, you need to write about it by mail in the name of the relevant credit bureau.
Paradoxically, the decision to close your credit card not only does not help you improve your rating, but can lower it further because of the reduction in your credit history and the credit available to you at the moment. It is best to keep your debt level up to 30% and, ideally, about 10% of the total amount of your loans, as well as to pay your bills on time.
The desire to get new loans in large numbers in order to improve your rating can turn into a boomerang effect and hit you even harder. Especially in the case of a mortgage loan, car loan or student loan. In the long run, it is better to act gradually, adding credits in a timely manner.
Restructuring of loans
You can hire a loan restructuring company on your behalf. It is important to hire a bona fide company that will not promise you a “XNUMX% credit rating increase”. This is illegal and no one can guarantee it to you. Help is especially needed when there are errors in your credit reports or in situations such as division of property in a divorce or identity theft.
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