Frugal living is the absolute key to financial happiness. This is probably something which the majority of people know, and what the minority who perhaps tend to the target audience of this post “need to know”.
Credit is perhaps one of the hardest forms of financial lending to actually hold onto. I remember when I was younger in a sense dreaming of the day I earned ‘mega bucks’ and paid for everything on my platinum credit card, saved huge amounts of money into my high interest paying savings account and generally lived the high life. Oh, and I could afford the biggest first time buyer mortgage going.
Life is just not like that.
When you actually have credit its amazing how quickly you either pick up the latest cards or loans, or even in my case are ’sold’ them. Its horrible to think that people simple do make money out of your financial misery. Sad, but coincidentally true.
Some Great advice came up on a frugal living site that I frequent on how to repair bad credit ratings etc. Its fairly useful.
Maybe you missed a few payments at a stressful time in your life, or ran up high credit card balances during your freshman year of college without realizing you had no way to pay. Or, bills for emergency medical treatment weren’t covered by insurance and went to collections. We all make mistakes, and I’m sure you are already paying the price for being less than careful with your credit. Take heart, friends. The problem is more common than you may realize, and you can get back on track. Here’s how:
- Stop using credit cards! This is an important first step. If you’re still using credit cards for purchases that are not emergencies without paying your bill in full each month, you need to suck it up and put away the plastic. Now.
- Make sure your accounts are up-to-date. All of them. Even if you can just pay the minimum. If you can’t even make the minimum payment, try step three.
- Get on a payment plan. Contact your creditors to arrange for payment. Most will work with you to help you bring your account current by either accepting reduced minimum payments for a while, reducing interest and fees, or a combination of both.
- Review your credit report for errors. It happens surprisingly often. Keep an eye out for accounts that aren’t yours, especially if you have a common name. Sometimes information gets inadvertently attached to the wrong person. Alert the credit agency immediately, especially if you suspect fraud. You have enough to worry about!
- Start establishing an on-time payment history. If you still have a credit card, make sure you pay on time every month. If you don’t have one, get one if you can. Set up one recurring charge like your cell phone bill, and pay it in full every single month. This advice may seem to contradict step one, but in order to repair your credit, you need to establish a history of paying on time and in full. So, stop using your credit cards recreationally, and start using them responsibly.
- Give it time. Repairing your credit isn’t going to happen overnight. Even once you bring your accounts up-to-date and start making a trail of on-time payments, it can still take several years for your previous delinquencies, collections or defaults to clear off your credit report.
Buyer beware! There are organizations of questionable repute claiming the ability to wipe clean your past credit mistakes. No one can instantly fix your credit. With these organizations you’ll probably encounter big fees and little results. Instead, if you need help, contact a reputable, nonprofit credit counseling agency. Fees are low or nonexistent, and the services they offer, like helping you negotiate payments, can make a world of difference.
