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Repairing Bad Credit
There is no remedy that can repair your bad credit quickly. First of all get a copy of your credit report, where you can find out details of all companies from which you have taken a loan. And then, start paying your debts off, one by one.
When you are writing checks to pay bills, make sure you make them out for the correct amount, sign them and mail them in time for them to be received before the due date. Sloppiness in writing and carelessness in not dating or signing a check can result in late payment and will be recorded on the credit report. Anyone can make a mistake once, but people who repeat their mistakes are not usually regarded as reliable.
Your Credit Report directly affects your ability to obtain a loan and the rate you will receive on that loan. Car insurance rates are often in relationship to your credit score! It may even affect your ability to get a job. You can help yourself improve your credit by taking the following steps:
- Pay your bills on time. Pay more than the minimum payment on charge cards. If you pay only the minimum it will take years to pay off credit cards, because interest is accruing on the remaining balance. Try to pay the balance off each month if at all possible.
- Open a checking account and always maintain enough money in that account to cover outstanding checks
- Don't move around. Creditors hate nomads. The key to stability is living where you can afford the rent, even if it's not up to your standards, so you don't have to move. If you move around you become uncreditworthy. Don't apply unless you've been in one place for at least six months. Have a verifiable address. Lenders want to open the phone book and see your name and address.
- Don't change jobs frequently. Notice the pattern yet? Creditors like stability.
- Open new credit accounts only when absolutely necessary.
- DO NOT SHOP to salve a wounded ego. Many people get into credit woes because they try to heal disappointments or a blow to their self-esteem with purchases they can't afford.
Watch the little things so you can have more money to pay off your debts. Once you start building good credit, it will be easier for you to obtain additional loans plus, you may be entitled to a better rate on your next loan.
People don't count lunch and snack money, which adds up. If you go out to lunch every day and your entree was $6, add drink, tax and tip, now you're at $10. If you do this every day, you are spending $50 a week and $200 a month. Try brown bagging and cut down on sodas from overpriced vending machines. That's saves $10 a week, $40 a month. Allow $3-$5 for calculating brown bag lunches. Now you're saving $240 a month, almost a car payment.
Do you have cable TV? That's another $50 a month and you might scale down the service. Stop moaning that you can't live without cable. Try getting outside and playing tennis or exercising more often, you'll feel better and won't need cable TV. Now you're up to $265 a month in savings. See the trend? Buy the Entertainment Coupon Book if you go out to eat or to movies a lot, for $30 from your local charity. Examine every thing you do or have that costs you money and see if you can reduce the amount you spend.
Having good credit pays off. If you have bad credit and borrow $15,000 for 5 years at 18%, the payments are $380.85, and total interest is $7,851. If your rate is 8%, the payment is $304.20, and total interest is $3,252. Let's face it if you have bad credit, life's going to be tough for you. So work on fixing your credit, then buy an affordable car and make your payments on time.
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