Your credit is one of the most important and valuable things that you have. When you have good credit, finding a vehicle loan, or getting a mortgage for your dream home isn’t difficult. However, it is very easy to mess up your credit score if you face any kind of sudden financial difficulty. Bouncing back from such events can be even more difficult, and can be a road that you have to travel uphill for years to rebuild your credit. Thankfully, there is a map that can show you how to get from your new, lower credit, back to where you need to be. Here is how you begin that process.
Starting From Where You Are
The reason for your current poor credit standing probably varies, but most likely occurred because you were not able to pay your bills on time. When bills become past due, the creditors report this to the credit reporting companies in an attempt to get their money and prevent other creditors from losing money. As you begin the process of building your credit back up, it’s a good idea to contact any companies that you might owe so that you can work out payment arrangements to make good on these accounts.
Once you’ve addressed the debt that you have, it’s a good idea to sit down and create a budget that will allow you to reduce your overall debt. The less money you owe, the higher your credit will inherently be, but paying things off should follow a few rules.
- Be sure to pay the smallest balances first. The more accounts you have paid off, the better things will look overall.
- Don’t use credit cards once they are paid off. Consider cutting some of them up.
- Don’t look at combining your balances unless you have to, especially if you have accounts that have been opened a long time.
- Make it a point to pay your new payments, if you’ve made arrangements, on time every month, even if it means going without something that might make your life easier.
Starting a New “Credit” Life
Even if you’ve suffered from bankruptcy, you should do what you can to establish a new life in the credit world. This means that you need to look for new lines of credit that you can obtain to show the credit world that you are willing and able to pay your bills on time now that you are out from under the pile of debt that was your past. While the interest rates on many of these credit cards may be overly high, you might find that they are also quite helpful in getting you back on your feet when it comes to your credit.
If you’ve been able to secure a new line of credit following some credit problems, always try to pay off your credit card balances on a monthly basis. Having a zero balance each and every month will ensure that you have positive marks on your credit report, rather than negative marks or balance carry-overs from the month before. Doing this can counter many of the long lasting negative marks on the credit report as well.
Think about getting a co-signer for a loan as well. If you have a friend or family member who has good credit, and who is willing to sign a loan with you, your credit can actually benefit from theirs. If you take this opportunity, however, make sure that you don’t let their good credit suffer from your poor habits. Always make it a point to pay this bill before the others so that you can prove yourself once again worthy of borrowing money.
Finally, build a good budget and a strategy that will help you maintain a positive financial momentum. Instead of spending more, start to build up as much savings as you possibly can. Don’t buy things that you can’t pay cash for. Use less of your credit and pay it off quickly. Cut down on what you use and be more frugal. In the end, it is these simple steps that will help you avoid credit problems in the future, and trouble in rebuilding your credit after a difficult financial time in your life.
Learn more about saving money and getting your credit back on track by visiting the author, Kimberly Hill’s blog at Badcreditpersonalloans.net!