Bad credit debt has become rampant in this country, as many debtors fail to make good on their promises and abuse their purchasing power. It's no wonder, then, that credit card debt reduction has become a multi-billion-dollar industry. What most Americans don't know is that they can repair credit history and right their wrongs on their own. The first step is to honestly assess your situation by tallying all the incoming income and all the outgoing fixed/variable expenses. If your earnings are less than your expenses, then you have serious problems that may require a full restructuring of your life. Do you have a gas-guzzling SUV or an electricity-sucking air conditioner running all the time? You'll likely have to sell any "money-pit items" and down-size your life a little bit. Hold a garage sale, move to a smaller place, conserve energy, shop around for better prices on medicine and opt for the bare bones cell phone/cable plans.
Secondly, you may want to negotiate with your creditors for a lower interest rate. While this won't repair credit outright, it will certainly give you all the benefits you're entitled to. If you have a credit score of 720 or higher, then you should have no problem finding a card with 0-5% interest rate for at least the first year. You can compare credit card offers at www.cardratings.com. Remember that when you pay less interest, more of your monthly payment goes toward your balance. If you have shoddy credit, then you'll have to settle for an interest rate no lower than 9.9%, yet keep in mind that if you pay your balance in full each month, you won't have to pay any interest at all. Making timely, complete payments on an unsecured credit card is one of the best ways for people with bad credit to create a new, positive payment history.
The third way to repair credit history is to start a fresh history of good credit. A leading credit repair Attorney says that a healthy credit portfolio includes both the unsecured credit card and secured loans, like an auto, home equity, mortgage or student loan. On average, most people have two or three credit cards they use regularly. Your balance should never be more than 30% of the maximum credit offered and should be paid on-time and in-full each month. While past mistakes will stay on your record for 7 years, the good news is that the past 48 months are the important ones, so within a year you'll see large improvements if you keep up with all your payments. Some people take out self-financed loans by taking $1,000 out of their savings and repaying themselves each month, while the bank reports all your payments as good credit history to the bureaus.
One last way to repair credit is to avoid some of the common pitfalls that land people in financial hot water. For example, never co-sign for someone! If he or she defaults on that loan, you'll be held personally responsible for their actions and may have to pay the full amount! Also, do not close out credit card accounts. Closing accounts will decrease the amount of available credit you have. Don't apply for a bunch of new credit cards at once because your report will show multiple "inquiries," which signals you're getting low on your unsecured credit card capital and desperately need more cash. Lastly, don't charge more than 25% of your available credit limit. Studies show those who max out their credit cards are more likely to file for bankruptcy.
At an early age people are given the opportunity to begin building their credit. They can acquire credit cards, loans for vehicles and homes and even money for school. But what happens when this credit is maxed out and there is no way to repay it all? It is all too easy to find yourself in over your head in bad credit. But you do not have to stay that way. There are many resources on the internet that can help you eliminate those bills and get back on your feet.
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