Having bad credit is something that can make life very difficult. It can happen to anyone at anytime. Numerous unexpected life situations like a recent divorce, loss of a job, medical emergency or several other set backs can cause financial stress and ultimately negatively affect your credit score. Once the bills start to mount up and there is just to much debt without enough income to pay the debt consistently, you start to miss some payments or are late on payments and your credit score can drop rather quickly. It is important to know that your credit score has gone down and at what level it is at.
Credit is something that makes life so much easier. Without credit, you would have to pay cash for everything you purchase and everything you do. Whether it is a home, a new car, doctor visits, school, large purchases like furniture and appliances, boats and outdoor toys and so many other things in life would all need to be paid with cash. It can take a very long time to save the kind of money necessary to be able to make those purchases. With credit you can make those purchases and make payments on those purchases with a small interest paid to your borrower. It allows you to take advantage of being able to have nice things without having all the money necessary to purchase them outright. In addition, it allows you to take advantage of the purchasing power of money today versus in the future as well as the increase in value of some assets like real estate over a longer period of time. Many times real estate as an example will have a higher increase in value than what you are paying in interest which ultimately increasing your overall asset value without spending the extra cash to make that happen. In addition having a good credit score will also provide you with a sense of security in emergency situations. If you are living in a home and your furnace goes out and you have good credit you can replace the furnace on a payment plan even if you don’t have the cash readily available to get a new one.
So a good credit score is something that you definitely want to try to maintain. But how do you fix bad credit if it does happen? The first thing you want to do is to stabilize your life. Whether that means getting a new job, working with a family member to get some help or down sizing and lowering your overall bills and costs. In order to fix your credit situation you first have to get into a position whereby you can afford your bills and your life. In some circumstances that could mean going through a personal bankruptcy, or selling your home, or decreasing the amount of assets that you owe money on in order to maintain those that are the most important to you.
Once you have righted the ship and your life has become stable, then you can start to fix your credit. As you begin to make payments on time on any asssets that you may still own, over a period of time your credit score will automatically start to rebound. This certainly could take some time and there are several things you can do to help it rebound faster.
Many banks offer secured credit cards. Essentially what these cards are is a pre-paid card very similar to a debit card. You establish an account for the card with an amount and the cash needs to be available in that account to be able to charge on the card. When you need more available you make a payment to the account. They usually set a limit and you make payments very similar to a regular credit card to bring the limit back up on a regular basis. Another way that can help is to become a co-borrower on another family member’s credit card. This establishes a credit line for you that will show timely payments and a solid account. In addition, any opportunity that you can use to get credit from a business inspite of your bad credit score will help to increase your credit score. So if you need a new used car for example for your new job, you can visit a buy here pay here auto dealership and many times you can purchase with an in-house loan through their company. Or various other establishments do similar bad credit loans. Be careful as some of these loans can have high interest rates.
The main thing is to make absolutely sure you are being very timely with your payments on all of your bills including your utility bills and everything. If you have student loans make sure they are paid on time. If you hstill maintain a home, make sure you do not go past the allottted grace period for the payments. All of these things will start to rebound your score and over time wuill brind your credit score back up to a good rating.