If you have a credit report, which has generated a score below 600, then it is time that you consider repairing your credit score. It is very important that you have a good credit score in order to get your new loan requests granted. Your credit report is the judging parameter for a lender or bank to decide whether or not the loan request will be granted. Thus you should try your level best to repair your credit score.
How can credit card consolidation help you?
Most of the times your credit report is affected negatively when you default on your monthly payments that you have to make to pay off your debts. If you see that you’re able to make only the minimum monthly payments then you can opt for credit card consolidation. While consolidating your debts, you can take out a new loan at lower rate of interest and pay back all your original credit card debts. In this method, all your multiple debts are consolidated into a single monthly payment which is convenient to make and keep a track of. Also your interest rate on the new loan is less, which in turn ensures the monthly payments get reduced. Thus you save a lot of money in the long run. But in order to take out a loan at sufficient low rate of interest, you need to improve your credit ratings to some extent.
How can you improve your credit ratings?
These are some steps that you can take to improve your credit ratings.
1. Dispute incorrect information – Many a times your credit report may have inaccurate negative information. It is necessary for you to evaluate your credit reports thoroughly and note down all the incorrect information which you need to dispute. These mistakes can either be attributed to clerical errors or wrong reporting by credit card company.
2. Clear any unpaid judgements – It is important that you clear any outstanding judgements you have. Otherwise, this will keep hurting your credit till you have either paid it off or it falls after 7 years, whichever comes earlier.
3. Checking your payment history – You should get current on delinquent accounts in order to improve your credit scores. You may also negotiate with your debt collectors to remove collection accounts and charge-offs from your credit report in return of certain sum of money.
If you take these necessary steps, then you can improve your credit score to some extent, which will help you take out a loan for credit card consolidation at suitable terms. Once you have paid all your debts through this loan, your accounts will be updated in your credit reports as “Paid in Full” and this may improve your credit score.