Having good credit can make your life much better. It is easier to buy a car or a house. A credit line can help when a large repair or medical bill lurks on the horizon. It is not always simple to anticipate ho much money may be needed to cover an emergency expense. Good credit can make a big difference during those times.
When your credit gets damaged in some way, you need a way to fix it.
Ultimately, you will always repair your own credit. No one will see your pain and do it for you. Even taking the route of debt counselling is a step you must take for yourself. Credit can be harmed in several different ways that leads to the same result. You have bad credit. How you go about repairing your credit will depend largely on how you got into trouble.
Not all bad or weak credit comes from overspending or too much unsecured debt.
If your credit problems are the result of losing your job, getting a new job with adequate pay may be all that is needed to repair your credit. A couple of months of a regular paycheck will catch you up on your late payments. This will cause your credit score to begin climbing back up to better looking numbers.
If you are lazy and just do not pay your bills on time, you have another problem.
It is not good if you have enough money to cover your bills but fail to get the it to your creditors. Repairing your credit will require you to either develop more personal discipline. You may have to pay someone who will do your accounting processes for you. As soon as your creditors start receiving timely payments, your credit problems should pass.
For most credit problems, one or more of three solutions are needed.
Credit repair starts with learning to spend less money. This can be difficult. On the one hand, some overspending is not a true choice. Medical bills and other emergencies can send a family deep into debt in the blink of an eye. Fortunately, most debt accrued in this way is not a continuous process. The situation ends and the paying off of the debt begins. If you cannot stem the tide of increasing debt, you will never repair your credit.
Develop a plan to make inroads into your existing debt.
Start by taking an honest look at who you owe, and how much you owe them. One of the problems many people have is denial of the full extent of their debt. Determine if you have enough income to live and make your loan payments. If you have inadequate income, you need to take other steps as soon as possible.
Figure out if you have a reasonable expectation of increasing your income.
You have to be able to increase your income enough to pay your monthly obligations. Actually, you need about 10 to 20 percent more than this amount to get out of debt in a reasonable amount of time. You need the extra income to be able to target one of your debts at a time to pay off as quickly as possible. If getting extra income requires a second or third job, getting rid of some debt quickly will let you cut back on this grueling work schedule before it affects your health.
As your bills are paid on time and the debt is reduced, your credit will improve rapidly.
However, if it is not possible to earn enough money to handle your current debt, you may need to take stronger action. Start by contacting all of your lenders to seek interest reductions and other potential changes to your payment structure. This can net you some real but usually temporary relief. Use this time wisely to explore other options. If you own a home that has enough equity, try to use that equity to get rid of much of your unsecured debt. The equity loan will always have a better interest rate and an overall lower payment than your combined credit card debt.
If all else fails, contact a reputable not-for-profit debt management company.
This company will help you determine if you can avoid more drastic steps. The will evaluate whether you are actually financially able to retire your debt. Their advisers are trained to assist you as you repair your own credit.
You may have to deal with the credit bureaus directly at the end of the process.
Based on how quickly and by what method you overcome your credit issues, the credit bureaus may need to be approached. You are allowed to put information and explanations in your own credit file. If catastrophic events harmed your credit, often a word or two in your own defense can make decent improvements in the way creditors view you as a credit risk.