Bad Credit Isn't Forever!

2007-03-08 10:33:40

( Financial )



No it’s not. Bad credit can be fixed, of course. There are myths out there that say if you have bad credit, you simply will never again have a credit card, a car loan or a home mortgage. The truth is, bad credit isn’t a dead end—there are ways to get off it, and the time to start is now!

Debt Consolidation

Debt consolidation is a good option if you are paying credit card debt. Credit cards almost always carry a much larger interest rate than even unsecured loans. Debt-consolidation is simply taking out one loan to pay off other loans. This is most often done to secure a lower interest rate and a fixed interest rate resulting in the convenience of servicing only one loan. Unsecured debt consolidation loans are possible, but often debt consolidation loans involve a secured loan against an asset which serves as collateral, usually a house. However, the decision to consolidate must be considered carefully because it can affect your ability to discharge debts if ever you plunge into bankruptcy.

Improving Your Credit Rating

Bad credit is stressful, so the sooner you improve your credit rating, the better it is for you and your future. First, get a copy of your credit report and check for mistakes. Dispute every negative item you see. Keep doing it until your creditor deletes these items. Pay your outstanding debts as quickly as possible, starting on those with the highest interest rates. If this overwhelms you, contact a nonprofit credit counseling organization to work out a debt consolidation plan for you. Never take the services offering you credit repair and bad debt loans, especially those from unsolicited emails. Cut up your credit cards! Live below your means and pay your bills promptly. After repaying all your debts, apply for a new credit card to build a good credit card history. Pay off the balance of the credit card monthly to rebuild good credit. Be responsible in your purchases.

Taking Charge Is Key

Most bad credit is the result of lack of understanding. Empower yourself by getting a copy of your credit report every year. Look for errors and inaccuracies. Keep copies of bills you’ve paid and record dates of payment. Keep a budget. Know how much you are spending and compare it to your net income. If there’s a deficit, balance it with a leaner budget. Research and learn more about your credit. Information is your best bet in getting rid of bad credit.


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