Bad Credit-Understanding The Situation
Before you begin the process of repairing your credit, you first need to ask yourself why you are having credit problems? Understanding how your problem occurred will help you better understand how you can turn things around. Poor credit is nothing to be ashamed of. It is far more common than you may realize. Often it may not even be your fault, like Gerald and Lisa.
They invested five years and all they money they saved to start a small sign company. Then one summer someone broke into their business office and stole all the computers and expensive sign-making equipment. Unfortunately they did not have any insurance to cover what was stolen. Gerald and Lisa had to take out loans to replace the items so they could stay in business. It took them years to recover financially from that, leaving them with bad credit.
On the other hand, like Paul, some people make poor credit decisions. Paul got his first credit card shortly after graduating from college. He suddenly became flooded with offers for more credit, which he promptly applied for. He wanted to show everyone that he was a success at his new career as a sales manager, so he filled up all his credit cards.
Then he began the juggling game of “robbing Peter to pay Paul,” which only got him deeper in debt. He took out a consolidation loan to pay off all the cards and put the debts in one big payment, but the temptation of all the empty cards was too much for him and he filled them all back up again. He finally had to declare bankruptcy because he was so deeply in debt that it was beyond his ability to ever pay off.
So, take a good look at what is going on in your life. Why do you have credit problems? Are you in debt because of circumstances beyond your control or is it a chronic situation? Are you still getting deeper into debt or are you fixing the problem? There is no point in fixing your credit if you will just end up losing it.
If you find that you are getting too deep in debt, there are several things you can do right away to help the situation, before it gets out of your control.
- Contact the credit card companies and see if they will work with you to help lower the monthly payments.
- Talk to a nonprofit credit counseling company. They provide budget counseling, educational programs, debt management assistance and housing counseling. Do your research here and be sure to choose a company with an excellent reputation. Beware of some “for profit” organizations that will help you with debt consolidation loans. Often they are very costly.
There is no quick fix for credit problems, but with a little patience and determination, you can not only get it under control, but you can end up with great credit and the feelings of success and self-worth that go along with it. So take the first step and determine to get debt free today!