More Americans are suffering under the weight of bad credit than ever before. Overextended on credit cards, mortgage payments climbing, fuel and food prices increasing, are all contributing.
One you get stuck with a bad credit score, digging out can be hard. There are a few products available on the market for helping people regain their good credit, but it takes some time and concentration to do the right steps and avoid credit scams.
First, you can call your credit card companies and try to get your card payments reduces, get your interest rate lowered, or otherwise get some kind of payment holiday. This can help you direct cash toward other expenses like food and gas for the car.
Next, you should close as many cards as you can. Having fewer cards helps build your credit score. And lower balances – not being maxed out on any card – also helps improve your credit score. By getting some concession from your credit card company, you’ll have extras cash to put toward the principal each month instead of just making the minimum payment.
Third, try not to take the step of borrowing more money to pay off cards. This usually backfires, as the borrower pays off balances, leaves the card active, and continues to charge on the card that was supposed to be closed. Unless you are getting a good low interest deal, don’t take this step unless you are committed to closing the credit card account immediately when you pay it off. You can also close an account that still has a balance; some card companies will then close the card automatically once the balance reaches zero.
Fourth, find a way to pay more than the minimum each month. List your credit cards and other debts in order of highest interest rate to lowest. Starting with the first card, figure out how much extra you can pay toward debt each month. For example if you’re willing to skip your manicure appointment each month, you can put the $25 toward your most pressing payment. This helps reduce the principal balance, reduces your interest, and gets the card paid off faster. In turn, your credit score starts to improve as well.
Last, don’t take out any more credit cards! If your credit is so bad that you can’t get approved, look on this as a blessing in disguise, because it will force you to live with the cash you bring home each month. Once your credit cards are paid off, and having learned to live on what you earn, your income will be all your own to invest and grow wealth for yourself and your family. Look forward to the day in the future when your payment plan will make that happen.
Tags: bad credit
Categories: Credit Repair
