Let's face it. Bad credit has been holding you back for far too long. Now that it is once again time to celebrate America's independence, why not make plans to win freedom from your credit issues? The Fourth of July is the perfect occasion to get inspired to take control of your finances, get your credit back on track and start taking advantage of all of the opportunities that you might be missing right now.
It may be hard to think with all of the fireworks going off. But after the festivities have quieted down, sit down and make a credit repair plan. With a little work and the right amount of motivation, around this time next year, you could really have a lot to celebrate.
Freedom from Bad Credit in Four Steps
If you have experienced late payments, charge-offs, repossession, a bankruptcy or any other event that has damaged your credit, you may be all-too aware of the negative results. It might be difficult for you to get approved for loans or credit cards, you are probably paying less than ideal interest rates on the loans you can get and you may have even been turned down for a job because of your low credit rating. The good news is that you can turn all of this around, but good credit won't happen overnight.
You will need to set goals, create a plan and then stick to your plan all the way to the end. Just remember that all of your efforts and commitment will eventually pay off in a big way when you have the kind of credit that you can be proud of.
- Check your credit reports. Even if you are pretty sure that you have bad credit, you should be 100% sure about where you stand. And because you are entitled to one complimentary copy of your report every twelve months from the three primary reporting bureaus (TransUnion, Experian and Equifax), it is easy enough to check your credit history.
It is a good idea to request all three reports if it has been a while since you have (or if you have never checked). And one of the main reasons why it is important to regularly look at your credit reports is that it will give you a chance to check them over for errors. A mistake on any of your credit reports could unnecessarily lower your rating. So, if you find anything that is incorrect, make sure that you dispute the error immediately.
- Create a realistic household budget. In order to move on to the next steps, you will want to get an accurate estimate of how much money you bring in every month and exactly how this income should be spent. To accomplish your credit repair goals, you will probably want to pay off some debt, put some money into savings and never, ever miss a payment again.
Missing a payment or even paying late can hurt your credit score. So, make a habit out of meeting the deadline for your bills each and every month. When making your budget, set aside money for these recurring bills, your regular expenses, a certain amount to put towards older debt (if applicable) and don't forget to put at least a little cash into your savings. You wouldn't want a financial emergency to come up and undo all of your hard work.
- Pay down high credit card balances. First of all, overusing your credit cards can cause debt to get out of hand very quickly. And, secondly, even if you pay all of your credit card bills on time, you can still do harm to your credit rating if you are using too much of your available credit. How much of your available credit that you are using is referred to as your utilization ratio. Ideally, you should be using less than 30% of any credit line. If you charge too much to any one account, it can seem like you are overly dependent on credit to cover your expenses, and your credit score will drop.
- Build your credit. Paying down debt and turning around non-productive spending behavior can stop current credit damage from happening. But if you want to build a really good credit score, you will need to be proactive about using credit in a positive way. All too often, people become "credit shy" after running into any sort of trouble with credit, meaning that they vow to stop using credit altogether. But the simple rule is this: you have to use credit to build good credit.
One good way to slowly start using credit again is to apply for a secured credit card. With these accounts, you put down a certain amount of your own money as a deposit, and this amount becomes your spending limit. You can then use your credit card to make purchases as you would with a "regular" credit card. After you have used the card for a period of time, while responsibly making payments, your credit score will start to improve. And with time, you may be permitted to transition over to an unsecured card with a higher spending limit.
Another popular way to build credit is by taking out an installment loan, such as the type of loan that you get when you finance a vehicle purchase. This works out quite well if you are working to repair your credit and need to buy a car at the same time. And if you are worried that your bad credit will prevent you from getting auto loan approval, you will be pleased to know that there are lenders out there who are qualified and willing to work with all credit types.
At Liberty to Finance
At Drivers Lane, we pride ourselves on being able to help thousands of bad credit car buyers every day. And this year, we would like to help you celebrate Independence Day with a much-needed car purchase. Regardless of what your credit looks like, we can connect you with a dealer in your area who has connections to the right types of lenders. You may even be able to buy your car with little or no money down.
Our process is fast and our service is free, so you have absolutely nothing to lose. Get back on the road and begin rebuilding your credit today by filling out our simple and secure online application. You can start right now.