After being sent to collections, your credit score is going to take a hit. This can make it difficult to get new credit, or even get approved for a loan. The good news is that there are steps you can take to rebuild your credit score and improve your chances of getting approved for future loans. In this blog post, we will discuss the steps you need to take in order to raise and fix your credit score after being sent to collections.
Settle With Your Debtors.
The first step you need to take is to settle your debts with your creditors. This can be done by making a lump sum payment, or by entering into a repayment plan. Once you have settled your debt, make sure to get a letter from the creditor stating that the debt has been paid in full. This will help show future creditors that you are capable of paying off your debts.
Apply for a secured credit card.
Use the new credit card often. One way to improve your credit score is by using a secured credit card. A secured credit card is a type of credit card that requires you to put down a deposit, which serves as your collateral in case you default on the debt. Using a secured credit card responsibly can help show future creditors that you are capable of managing your debts.
Ask to be an authorized user on someone else’s credit card.
Another way to help improve your credit score is by becoming an authorized user on someone else’s credit card. This means that you will be able to use the credit card, but the primary account holder will be responsible for making the payments. Becoming an authorized user can help show future creditors that you are capable of managing a credit card responsibly.
Don’t Close Accounts!
One mistake that people often make is closing accounts after they have been sent to collections. This can actually hurt your credit score, because it lowers the amount of available credit you have. Additionally, closing accounts can also make it appear as though you are trying to hide something from creditors. It’s best to keep your accounts open, even if you are not using them, so that creditors can see that you are capable of managing your debts.
Consolidate all debts into a single loan.
Another way to improve your credit score is by consolidating all of your debts into a single loan. This can help reduce the amount of debt you have, which will in turn improve your credit score. Consolidating your debt can also make it easier to manage your payments, as you will only have one payment to make each month.
These are just a few steps you can take to raise and fix your credit score after being sent to collections. By following these steps, you can improve your chances of getting approved for future loans and lines of credit. Don’t let a collections notice ruin your credit score – take action today to improve your creditworthiness.