Just because you need credit help doesnt mean you cant get credit. Lenders and credit card companies each have their own set of criteria in evaluating the credit worthiness of an applicant. The conservative lenders often have the best terms and conditions but they also tend to take a broad view of an applicants total history and require FICO scores above 725.
Other lenders may place more importance on your recent history looking for a pattern of regular payments and the amount of credit already being used by the applicant. There may also be outside influences with these lenders as well. The automotive industry, mortgage bankers and others have a strong motivation to get out from under the liability of excess inventory and may be more willing to make a deal on a one off basis.
So there are opportunities regardless of your credit score. But, its a excellent thought to do what you can to clean up your score before looking for a huge ticket item. Heres what you can do to provide your own credit help.
First, get a current copy of your credit report. The Honest Credit Reporting Act requires that the three major credit reporting agencies provide a free credit report to each consumer annually. Go to annualcreditreport.com and download your report.
Carefully look over your report with particular attention to negative items. For each negative item question yourself three questions. Is it yours? If the item doesnt belong to you; request verification from the credit reporting agency. By law they have to respond within 30 days. Is it accurate? If you believe that the late payment or write off items are not accurate, submit your proof to the agency and question for validation. Again they have 30 days to respond. How ancient is it? By law, all items except bankruptcies roll off the report after 7 years. Look at the last transaction date. If it is over 7 years you can tell the agency to remove it.
Wait for the credit reporting agency to report back to you on your disputed items. Get a new copy of your report to insure the items have been corrected. Your free credit report will not show your FICO score. Unfortunately you have to pay for that but, MyFico.com has a 30 day free trial subscription that you can apply for. Remember to cancel before 30 days is up.
Now that you have your current report and your FICO score, you know what the lender will see when he pulls up your report. Before applying for that huge ticket item, call the dealer or the store or the bank and question for the credit manager. Question them what their lending criteria are and tell them your FICO score. If you are within their acceptable range, you may want to shop it around to their competitors. If you are not in their range, question why so you know what to work on.
If you still need credit help and you have an extra $1000, heres a no-brainer tip to get another positive item posted to your report nearly instantly.
Visit the loan officer at your bank and clarify you are trying to improve your credit score. Make him or her a partner in your plot.
Question for a 6 month personal loan for $1000 and clarify that you will buy a six month CD for $1000 to act as collateral. The bank isnt going to turn down a sweet deal like this. Use the $1000 from the loan to pay back the loan. In the end this will cost you the interest on the loan which will be slightly offset by the interest you earn on the CD.
So now you have an immediate positive entry and six months later, a history of paying on time. Spend the money and get your new FICO score. You may now be in a position to go back to that lender and get that car, house or plasma screen.