Your best option with bad credit is to try to consolidate it as quickly as possible by building up your credit score. You have to know that your credit score will affect every single financial product you can take out and also affects many aspects of your life. Therefore you must be able to face the situation and deal with it, as credit debt will not disappear just on its own, you must take responsibility.
Your bad credit score can easily prevent you from getting a specific job. You cannot possibly rent a new home through an agency. But that is not all. Having a poor credit rating also affects the quality of life you can live, and causes stress. Stress is well known of being responsible for long term illnesses and critical illness as well. Would losing your job or getting in hospital solve your bad credit? Absolutely not!
Face your credit situation and make a plan you can stick with. You have to start with getting statements of all your credit products, and summing them up. You also have to make a monthly expenditure to see if you can at all afford the monthly payments. For example if you have a high interest credit card or two, you are more than likely to pay only the interest back without reducing the balance. So you have to either switch to a lower interest product or pay back more monthly, enough to clear a reasonable percentage of the balance each month. If you have any savings or money left in the end of the month, it is a wise decision to use it to consolidate a part of your credit, usually the one that gets charged the highest interest.
Look for consolidation products. If you are shopping around for debt consolidation products, you have to start with your creditors first. They are likely to be more flexible if you have been their customer for years, and also getting a financial advice from your bank or building society is absolutely free. Alternatively you can see an independent debt advice company, that will give you a credit debt evaluation overview for free, and offer numerous solutions.
One of the easiest method of credit card debt reduction which actually gets rid of the existing credit card debt is debt consolidation i.e. consolidating debt from high APR credit cards to a low APR card or a loan. This credit card debt reduction method will still not reduce the capital, only the money you have to pay back, reduces the rate your credit card debt grows. This simple method of credit card debt reduction can also give you a benefit of 0% APR for an initial period if you take on a new card instead of the expensive high APR credit cards, or in case of a personal loan, you can benefit from a deferred payment.
Debt consolidation plans can also bring some additional benefits detailed in terms of rewards of your new credit card company. Although this method only prevents the interest piling up on your credit card debt, and will reduce the amount of money you will have to pay back monthly, it doesn’t get rid of the debt itself. If you are not sure you would like to take on a new card, or are not confident that you can pay off your credit card debt before the initial low interest period ends and the higher interest kicks in, you can always ask for the help of a credit card debt assistance company or seek government help.
Fist of all you do have to change your relationship with money and credit. You have to learn budgeting and think over every bigger purchase considering the amount of credit and the interest charged on your credit card. You also have to make up a plan of trying to reduce the interest charged by paying off more monthly by budgeting or getting a balance transfer with a much lower or often zero percent APR. But before taking on a new card you have to make sure that you have a plan in place to pay off your credit card debt before the higher interest kicks in.
Budget wisely. If you are determined enough to clear your credit balances, you must make sure that you can deliver the promises you made yourself. There is no use of getting into a new debt, and all that changes is the name of your lender, your payments won’t get reduced. So if you are ever thinking about a fixed term 0% APR consolidation credit card, make sure that you have a careful plan in place to clear off the balance before the higher interest is applied, otherwise you will be in the same situation you started off from.
Plan ahead. Making a plan for long term can also help dealing with poor credit rating. Sometimes we know where we want to go but don’t know how. Draw up a step by step plan and stick with the deadlines you set. Make a deadline for talking to your lenders, shopping around products, and make a monthly consolidation budget as well. Make a saving plan by cutting back on expenses and put the whole amount back into clearing your credit balances.
Seek professional help. You have to know that you are not the only person who is dealing with poor credit rating right now, and many people have managed to better their credit score through obtaining professional help. You can actually use the “DIY” methods, too, but it will be much slower and you have to invest much more energy in your debt consolidation process plan.