The reason for having bad credit in the first place is important to address. If you have bad credit because one breadwinner has lost a job or you have large medical bills or other unexpected expenses, your resources for re-establishing good credit may be limited. Some people simply do not have the income to pay their bills no matter how much they try to limit their spending. For such individuals, a credit counseling service might be advisable.
A credit counseling service can help you lower your overall debt by contacting your creditors to lower your debt and creating a manageable payment plan for all of your debts. This will not, in itself, give you good credit, but it will create the opportunity to repair your credit by first getting you out of debt.
Repairing bad credit is easier than most people believe and can be done usually within one to three years. Below are some of the important features of credit repair.
Pay all of your bills and debts on time. There is a little bit of a grace period for most bills, but if you go over 30 days, you are likely to get dinged on your credit report. As for credit cards, a late payment will cost you in the neighborhood of $30 or more. This hurts your credit and puts you further in debt.
Pay more than the minimum payment on your credit card. Paying the minimum on your credit card will not even keep you even. Unless you pay more than the minimum, you will find yourself sinking further into debt. If you only pay the minimum but charge much more than the minimum, you can see how you can quickly get in way over your head.
Buy responsibly! Many people tend to buy things they really can’t afford (and frankly don’t need). They treat credit as if it were a second income, some kind of free money. If you end up having something repossessed for lack of payments, you are hurting your credit.
Given the above, you can see that repairing your bad credit isn’t that difficult. You need to pay your bills on time, including your credit cards. You need to pay more than the minimum on your cards. Most important, you need to curtail your spending, especially for unnecessary items.
If what we are looking for in life is a sense of peace and contentment, being out of debt and having good credit (and maybe even saving some money every month) is much more valuable than a bigger TV or the latest electronic gadget. When repairing bad credit, we may need to look at our emotional needs. Many people buy things to make them feel better. But then when they get deep in debt, it doesn’t feel so good.
Buying things is not the best way to get our emotional needs met. We need to take a hard look at our values and see if we can find satisfaction in our friends and family and not need to look for it in unnecessary possessions. These tend to bring very fleeting pleasure and, just like an addict, we need to be continually looking for the next cool thing.
Decide what is important in your life and pursue that. Other things will fall into place.