Having bad credit can affect many different areas of your life, sometimes with you even realizing it. For example, you may find it difficult to rent a new home, buy a car, and even get a job because many employers run credit checks as part of the recruitment process. If you are desperate to boost your credit score and get rid of your bad credit status, you need to follow the five easy steps below and discover how you can get your finances out of the red.
Face your fears
It can be all too tempting and easy to simply ignore your debt, but in doing this, you are potentially allowing it to increase. The first thing you need to do is to calculate the exact amount of debt you have. Daunting as this may be, you need to be aware of how much money you owe before you take steps to eliminate this debt. If you don’t have documentation regarding certain debts, contact the creditors for the precise amount, including interest, that you owe. Should you be feeling too overwhelmed, consider seeking the advice of a debt counselor who can go through the debts with you and also assist you with a repayment plan.
Create a budget – and stick to it!
Once you calculate how much you owe, the next step is to create a visual budget. Use a spreadsheet to note all your income and expenditure, being precise about where exactly your money is going. There are several easy-to-understand apps available which can help you create a realistic budget, but it is also quite simple to create your own. Once you see how much you are spending on certain areas of your life, you can begin to cut back on the things you don’t need. While you are in debt, luxury expenditure such as nights out, dining at restaurants, and even buying your morning coffee or lunch at work needs to stop. Set a daily, (or weekly) budget and if you have a family to support, cook meals in batches to save money on ingredients, and freeze leftovers, so no food goes to waste. If your kids simply can’t give up extra-curricular activities, try to carpool with other parents so you can save money on gas.
Pay a lump sum
It may surprise you to learn that there are some creditors who are willing to accept a lump sum of a lower value than the debt. This is because creditors would rather receive a substantial amount of the debt owed rather than having to wait for small payments to be paid over a period of time. Contact your creditors and ask if they would be willing to accept a lump sum, and how much they would accept. This option is only viable, however, if you have a bit of cash to spare. Do not get yourself into even more financial difficulty by attempting to pay off more than you can afford.
Consolidate your debts
This option should only be considered if you are serious about clearing your debts. It can be easier to have a single debt rather than several and consolidating the debt can help you in your time of need. Although it can be extremely difficult to obtain a loan when you have bad credit, there are loans available specifically for those with bad credit. This loan can be used to pay off all your current debts and you will only need to pay towards one creditor. Make you pay each repayment on time and you could soon find that your credit rating improves. Paying on time and in full can ensure you do not find yourself in even more financial distress.
Get another job
It may sound easier said than done, but getting an extra job while you pay back your debts will have the debt paid off in less time. You can even work from home so that you won’t be spending money on commuting, and you won’t be missing out on too much time with the family. Many people who want or need to work from home do so by completing surveys, entering competitions, and even writing blogs. Several companies offer money to people who complete surveys, and although you could find yourself filling many surveys over a long period of time before being paid, it is still a valid source of income. Entering competitions is not a guaranteed way to make money, but if you commit to a couple of hours per day, you could win cash prizes and other prizes that can be sold for cash. Becoming a successful blog writer takes time, but if you love writing and think your life would be of interest to a certain demographic, you could attract followers who would then attract the interest of companies that want to advertise on your blog site or to pay you to write about their products.
All these options are relatively easy to achieve, and although it may be hard to let go of some items and activities you have so far taken for granted, the short-term sacrifice will be well worth the long-term gain of being rid of your bad credit rating for good. If you are suffering from very bad debt and you don’t think you will be able to improve your credit alone, seek the advice of a professional debt advisor. Many people suffer from bad debt, and just because you have bad credit, you shouldn’t be made to feel terrible about it – especially as you are keen to do something about it! The fact that you are searching for ways out of your situation shows you are on your way to resolving the situation. Whenever you are tempted to spend money you don’t have on frivolous things, remember your end goal and how amazing it will feel to be finally free from debt. Cut up those credit cards and stick to your budget.
Follow these five easy steps to get rid of bad credit and see what a difference being proactive can be.
