I wish a magician would appear out of nowhere and tell me how to get rid of bad credit once and for all. My car is breaking down all the time and I need to borrow money to finance a new one. I have a poor credit rating and am having difficulty getting a loan. It seems as though a lot of people find themselves in the same situation as I do. See for yourself. Launch your internet browser and type in bad credit.
Thousands of results will appear on your screen and most of the articles will cover the same things:
- How to check your credit report
- How to repair your poor credit score
- How to improve your credit rating
- How to change your lifestyle to maintain a good credit rating
Your credit score affects every aspect of your life. If you are having money problems, do yourself a favor, relieve your stress and study these articles on how to get rid of bad credit once and for all. Get going right away!
No overnight miracle
All articles on how to get rid of bad credit stress that this will not happen overnight. Don’t look for a quick fix because there isn’t one. It can take about a year before your money matters are stable again. You will need effort, willpower, determination and patience. Don’t delay, start right away. Draw up a plan of action and set yourself a deadline. Include in your plan what you will do to keep a good credit score once you have achieved it.
How did you get into this mess?
Before you look for help on how to get rid of bad credit, think about how you got into this situation in the first place. We all go through stages in our lives where we have money problems. Some are beyond our control, and others we bring on ourselves. Do you spend more than you earn? Did you have unexpected medical or repair bills? Did you have to pay for a wedding? Did anyone in your family lose his job? Identify problem situations within your control so that you can try to prevent them from happening again.
Impact of a poor credit rating
A poor credit rating impacts us financially and personally. We need to have a good credit score if we want to borrow money, apply for a mortgage or car finance. Even if we do manage to get a loan, as a high risk borrower, we could be charged higher interest rates. It could also make it more difficult to get a mobile phone, rent an apartment or even find employment.
Apart from financial hardship, worrying about money is also very stressful. Stress affects our ability to cope with difficulties, and to think clearly and come up with solutions. Personal debt has a stigma attached to it. It can affect our personal relationships, health, sense of security and self confidence.
We should not delay in getting advice on how to get rid of bad credit once and for all.
Change your lifestyle
If you are serious about how to get rid of bad credit – you need to change. If your attitude towards money and your spending and lifestyle habits cause your poor credit rating, then you need to change them.
Draw up a budget every month and stick to it
- If you can’t pay in cash don’t buy it
- Cut back on luxuries
- Shop around for bargains
- Re-use and repair rather than buy new items
- Join a carpool to save on gas.
Don’t see it as having to do without. Be creative and figure out how to do more with less.
Do it yourself or get help
If you are overwhelmed by your debt, seek advice from a counselor on how to get rid of bad credit. Don’t feel embarrassed to discuss your money matters with a stranger. A debt counselor is used to dealing with people in your situation. The counselor will sit down with you and go through your credit report. He will interpret the report for you and give advice on what action to take to manage the debt, and repair and improve a poor credit score.
Start with your credit score
All the advice on how to get rid of bad credit starts at the same point. Get your free online credit report from American Credit Report and find out your credit score. Your credit score is based on your credit history from three main credit bureaus. The Fair Credit Reporting Act states that you are entitled to one free report a year from these bureaus. The report provides answers to questions about your credit history.
- Do you make your payments on time?
- How many and what type of accounts do you have?
- How long you have had them?
- How much do you owe?
- Have any actions been taken against you?
Check your credit report
Your credit report is a starting point for how to get rid of bad credit. Your score gives an indication of how much of a credit risk you are. Read through your report very carefully. Make sure that all the information used to work out your score is accurate. Confirm that your personal details are correct. Query anything you are doubtful about. Although it takes time, check each entry as it will have an effect on your ability to borrow money or get credit. Contact the bureau or collection agency to correct the error as soon as possible.
How to get rid of bad credit once and for all
You have checked and corrected your credit report. Now is the time to do something to repair your credit score. Search for as many credit score tips that you can find to help you prepare your credit repair action plan. Set realistic goals. Draw up an activity list of how to get rid of bad credit. Set yourself a time limit for each activity. Don’t be too ambitious. Take small steps at a time. Put easy to achieve actions at the top of your list so that you feel as though you are making progress.
Look through your credit report and make a list of all your outstanding bills, debts and amounts owing. Group them as follows:
- Current monthly bills
- Small amounts owing
- Large amounts owing
- Bills outstanding for a long period
- Bills outstanding for a short period
- Missed monthly payments
- Top priority payment plans
Consider these tips when you work out your payment plans on how to get rid of bad credit.
- Pay current monthly bills on due date so that you do not add to your poor credit score
- Pay missed amounts on monthly accounts
- Pay all minimum amounts owing on credit cards and loans
- Pay small amounts first so that you can tick them off the list
- Pay bills outstanding for a long period as they are likely to be included in the report
- Pay outstanding balances on credit cards
- If you can’t pay the full amount make small regular payments on large debts
- Communicate with your creditors. Tell them about your money problems. Discuss payment plans and options with them
- Reduce the number of active credit cards you have
- Try not to use your credit cards while paying off outstanding balances
- Do not use your credit cards to the maximum credit limit
- Don’t open a number of different accounts at the same time. This could expose you to temptation to increase your debt
- Try and save a small amount of money every month to cover unexpected expenses such as medical bills and car repairs
- Different types of accounts mean a higher credit score, e.g. credit cards and personal loans
- Keep accounts open even if you don’t use them. The age of your accounts has a positive effect.
- Check your credit report on a regular basis.
- Try to keep your credit report enquiries to a minimum. Every time a credit check is done, it negatively affects your credit score
Credit management tips
While you are trying to reduce your debt, try to minimize your spending and manage it carefully. Credit management tips on how to get rid of bad credit include:
How to improve your credit rating
You not only need to know how to get rid of bad credit, you need to understand how the credit score is calculated so that you can improve your credit rating.
There are two very simple rules to remember about how to get rid of bad credit; make more money than you need to borrow and spend carefully and pay back all that you owe when it is due.
With all these tips, I feel better already. I now have the ammunition to take control over my spending and credit management. I hope you do as well. I see now that I can’t rely on a magician to wave a magic wand. I will have to use these tips and work out for myself how to get rid of bad credit once and for all.