One of the biggest responsibilities in life is how we all manage our money. Using it wisely, saving it, and at times, even spending it. In this day and age, having cash isn’t always the best answer. Occasionally, having a credit or charge card is necessary to, say, rent a car or get a plane ticket. How people handle credit can shape how they live. Sometimes they handle it responsibly, sometimes they don’t. Getting over bad credit is possible, but can take some doing. Here are some steps that can help.
There are a number of reasons that you may find yourself with bad credit. Divorces, downsizing in the workforce, medical bills stemming from a serious injury or disease, and spending beyond your means are just a few of the reasons behind the bad credit reports of many consumers today. Bad credit could keep you from securing the loans from lenders you need for large purchases, such as a home or new vehicle. You can make repairs to your bad credit to improve your credit rating. Repair your bad credit and regain your consumer borrowing power.
- Read your credit report to discover what things are listed on the report that have led to your bad credit rating in the first place.
- If you note inaccuracies on your credit report, you’ll need to dispute those with the individual creditors reporting them. You can’t dispute accurate information even if it does reflect poorly on your credit report, but you can make repairs and improve your credit.
- Contact individual creditors and ask if they’re willing to work with you to create a repayment plan you can afford, but also assures the creditor of your intent to repay the debt owed them.
- Contact your credit card companies and ask for a reduction in the interest rate applied to your credit cards. Some may not be willing, but many credit card companies are willing to do so for cardholders. Use the reduction of interest applied to a credit card account to pay the debt you have on it down faster.
- Gather pay stubs and statements for monthly, quarterly, and annual bills (utilities, phone, mortgage, home insurance, retirement account contributions) and create a budget to keep from spending beyond what you actually bring in. You’ll also find ways to spend less and use those savings to pay on the debts causing you bad credit.
- Maxed-out credit cards? Barely able to make the minimum payments on them? Stop using them! Hide them away in a drawer so they won’t tempt you to use them and add even more debts to them.
- Contact a credit counseling service if your debts are so large that you cannot make regular payments on all of them. A credit counseling service can help you create a plan of action to take care of the debts that are responsible for your bad credit. They can often times speak to your creditors and get you reduced rates and extended payments plans as well.
- Apply for a bank sponsored debit or prepaid credit card. As you use this for purchases and make regular payments, you will slowly rebuild bad credit into good credit.
Immediately toss out those solicitations inviting you to open new lines of credit that come in the mail. New won’t repair old, and opening too many lines of credit reflects poorly on a credit report. Don’t stop making payments on your debts. Contact creditors if you can’t make agreed on payments and explain your situation. Make an agreement for lower payments and follow through on them. This may show up as slow-payment on your credit report, but that looks much better to creditors than no payment.
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[tags]credit, debt, finances[/tags]