More and more people, these days, are suffering with bad credit. While it’s really simple to damage your credit, it can be extra difficult to rebuild it. Once you have a negative mark on your credit report, it can take years to make it go away. Yet, in a world where so much relies on your credit and the ability to meet your debt commitments, it’s vital to get started on repairing and controlling the damage that might have been done. To that end, here are some simple things that you can do to reduce the damage and repair your credit so that you aren’t always hurt by what might have happened in the past.
Start Now
There are various reasons why people suffer from poor credit, but usually it all comes down to the fact that some bills were not paid on time and some financial commitments were not met. When you fail to pay an agreed upon payment on time, you will quickly find yourself in a downward spiral. Creditors will report to the three credit agencies that you are not paying things on time, which will alert future creditors not to lend you money. The more of these negative marks you have on your credit report, the harder it will be to secure the money you need for the things you want to purchase. That’s why you should start from where you stand now and contact any creditors that you owe right now. Making good on old accounts can help you get your credit report back to a state of good standing.
After you’ve had a chance to look over all of the people you owe and all of the debt you currently carry, take a look at how to reduce the overall amount that you owe and find a way to put that plan to work. Remember, paying things off will ultimately make your credit score go up as you have more money and owe fewer people. Keep the following in mind as you devise your pay off plan.
- Paying off smaller balances in the beginning will give you the biggest kick start possible. When you owe fewer people, things look better overall.
- Consider getting rid of or closing some of your credit card accounts once they are paid in full.
- If you have older accounts, don’t consider combining them or their balances. The age of the account has something to do with positive marks on your credit.
- Do everything you have to in order to meet the new payments you’ve made arrangements to make. Go without extras in order to make this happen.
A New Lease on Credit
No matter what kind of financial trouble you’ve faced, it’s totally possible to rebuild your credit and make a new life in the financial world. In most cases, this means that you’ll have to go out and seek some new lines of credit to re-establish yourself and show creditors that you’ve turned things around. Once you’ve been able to pay off the debt of the past and you are working on stabilizing things, opening new accounts will prove that you can pay things on time now. At first, interest rates might be really high on these accounts, but that is the price that you will pay when you want to re-establish your credit worthiness.
Once you begin to rebuild your credit and have been able to open a new account or two, make it an absolute point to pay any balances off on a monthly basis. Having carry over balances from month to month will show up as negative on your credit report, while a zero balance will show as a positive mark to current and future creditors. At the same time, these zero balances may actually counter some of the prior negative marks on your credit reports from the three reporting agencies.
If you’ve been unable to get a loan or open a line of credit, then consider asking your friends and family for a co-signer, who can help you get a loan based on their credit. If you do go this route, make sure that you are able to pay the bill each month in order to both build your credit and protect the credit of the person who stuck their neck out for you. If you fall back into old habits and don’t pay things on time, the person who was helping you will suffer as well.
At the end of the process, where you stand now, make sure that you come up with a plan that will enable you to move into the future in a manner that is financially beneficial for you and those who have helped you. Building a budget and sticking to it will help you avoid falling into bad habits from the past and will enable you to move forward far easier than when you had perpetual poor credit. While the process won’t be easy, and you might have to go without some of life’s better aspects from time to time, it’s well worth it to have a good credit score and the report to go with it.
About the Author: Kim Hill, who owns the website Bad Credit Personal Loans .net, strives to provide consumers with the best possible financial advice she can give. Visit her website for more information about getting the money you need today.
