Bad credit spoils everything – your dreams for a new house, new car, student loan, any kind of loan. If you have fallen into the debt trap, the best thing to do is to repair your bad credit first and to go shopping later.
Many people will not follow this advice especially if they want to buy a new car. Probably the main reason is that first of all a car is not a high value purchase and second – they do not want to wait. Of course financing for buying a car with a bad credit history is available. It is a separate question who will provide it and if the terms will be as good as they can be if the credit score was OK.
For those who want to repair their bad credit, here are a few tips about how to achieve this.
The first thing to do is to get a copy of your credit report. Get an annual copy and check it thoroughly. You will easily see which loan or loans caused the bad credit score. Try to sort them out by making a repayment plan. You can ask the creditor to do it for you or to ask an independent company to do it. No matter who will make the plan, be honest about your incomes so that a reasonable and realistic plan to be made and start paying the repayment fees regularly. Missing the final repayment date also harms your credit history.
The next steps depend on the type of debt you have. If you have credit card debt you can try applying for a new card and start using it carefully while repaying the old debts. You good “behavior” will count when your credit score is reviewed.
The last resort to “start clean” is to file bankruptcy. This will clean some or all of your debt but will leave a huge ugly stain in your credit history. Of course people who bankrupt can fix their credit score but the time required for this is much more.
Once you have a plan and have taken steps to rebuild your credit score, be accurate and patient. Your bad credit will turn into something from the past quickly if you stay current with outstanding bills, repayments and any other financial issues. Always check the monthly statements and plan in advance how to pay all of your bills in time. If you find you are not earning enough, that cut off your budget. This is not the most pleasant thing but it wil help in the long run.