The Fortunate Investor

Investing, Business, Saving, Debt, Money, Retirement, Taxes and Family Finances

Home » Bouncing Back: A Beginner’s Guide to Repairing Your Credit

Bouncing Back: A Beginner’s Guide to Repairing Your Credit

By Bobby | This article may contain affiliate links. For more information visit our Disclosure

Tweet
Share
Pin
Share
Share

Bouncing Back: A Beginner's Guide to Repairing Your CreditAre you a magical wizard?

Do you have the powers to wish your debt away? Chances are, no matter how hard you try to ignore it, your debt remains faithful, refusing to leave your side.

If your finances aren’t as healthy as you’d like them to be, you’re not alone. The average American suffers from at least $38,000 of debt.

Finances can be stressful, but they don’t have to be hopeless. You can get out of debt, and you don’t have to be a magical wizard or financial genius to do it.

Are you looking into repairing your credit, but don’t know where to begin? Read on to learn a few simple steps to make your credit score shine again.

Before Repairing Your Credit

Before you can do anything, you’ll need to know where you stand. That’s why the first step you’ll be taking is to obtain an accurate report of your credit score. Next, write down the reasons you want to improve your credit.

Having your end goal at the forefront of your mind will help keep you motivated. If you’re not sure why you’re repairing your credit score, you might not understand how it’s affecting your life.

Did you know your credit score can affect where you live, work, and what type of internet deals you qualify for?

Without stressing yourself out, take time to appreciate what’s on the line here. How will your life change for the better when your score improves? What’s at stake if it stays the same?

Start Paying on Time

Now, you can start taking massive action towards your goal. Instead of spending money you don’t have on paying off debt, focus on timely payments. Get a calendar, or app on your phone, and set notifications for every upcoming payment.

Paying on time will help further debt from creeping up on you over time. It’s also an effective strategy for showing lenders you’re serious about making payments.

Open a New Account

After you begin paying your current accounts on time, you need to open a new account. Specifically, we recommend you open up a credit card account. Credit cards aren’t all bad, especially if you learn to use them right.

Here’s the ideal way for you to use your credit card as a tool.

  • Pay for things you can afford
  • Pay off monthly bill ahead of time
  • Look for rewards
  • Review bonuses

Are you up to your ears in high-rate credit card debt? Don't worry; there is a way out! Here are 7 smart tips for getting out of credit card debt fast. Does the thought of checking out your credit score make you want to scream? Credit cards are a great way to lessen that anxiety. Like all good things though, as quick as it can help, it can also destroy if you don't pay on them. Once you pile on the credit card debt, it can be a challenge to get out. Don't let this discourage you. There are a few ways to save yourself from drowning in numbers. Here are a few tips on getting rid of credit card debt and claiming your life back. 1. Stop Using Your Card If you know for a fact that you have terrible spending habits, hide your card from yourself before you sink too far into the pit. You can cut it up, lock it in a safe and lose the code, package it in duct tape and bury it in the backyard, use a wood chipper, the options are endless as long as it is out of your hands. If you're using it to pay your bills then, try and set up a payment plan with your utility company. Or downgrade your house or car. Fitting your bills into your budget will make you less likely to use your credit card and give you a little breathing room for managing credit card debt. 2. Make a List of All Your Debt Studying your enemy is one of the key factors of defeating it. Tis means you should make a list of all the credit card debt you've currently got under your belt. Making a list will help you figure out which one you should prioritize and pay off first. How do you determine this? Check out the standing of all the existing credit card debt you have and their interest rates. 3. Come up with a Strategy Credit cards can do massive damage to your credit score so you want to pay the one with the highest interest off first. After you've paid off that one, go on to the next one. Eventually, you will pay them all off as you go down the line. Make sure you continue making minimum payments on them after so you don't find yourself drowning again. 4. Try to Get a Lower Interest Rate Not all credit card companies will be agreeable about giving you a lower interest rate, but it never hurts to try for the sake of getting lower payments. Sharpen up your negotiation skills by using any kind of leverage you can to get them to work with you. Bringing up how long you've been with them or your good standing up to this point might get them to budge a bit in your favor. If they are completely unagreeable, then transferring your debt to a new, lower-rate card might be an option, or you can take out a personal loan. Personal loans can be a little harder to get, but you'll find that if you can get one to pay off your debt, the interest rate is usually way lower than your credit card one. Eventually, the loan will replace your credit card debt with an installment loan. Believe it or not, this will actually look better on your credit. To find out more on personal loans you can visit this website. 5. Find a Payment Plan If getting a lower interest rate still doesn't work out for you, then it's time to figure out some other options. The easiest thing you can do is either ask for a deferment or a new payment plan. Credit card companies like money, so they will most likely work with you on this so they don't have a non-paying account in their system. 6. Limit that Spending If you limit your spending, you'll have more money to put toward your credit cards each month. Just think: skipping out on that morning coffee could allow you to pay your debt faster and lower your interest rate. If you want to make a little game out of it you can join spending challenges. This could mean going on a 14-day to a year-long spending ban depending on what's best for you. This is recommended if you just don't trust yourself to stay on budget. If you have self-control, then it's just a matter of keeping up with it and throwing these savings into your loan debt. 7. Put Any Extra Income Towards Credit Card Debt Budgeting can only take you so far so on top of putting any extra savings toward your debt. You can take on little odd jobs for extra money. There most likely a ton of options available for you in your area. You've just got to call around or surf the web to seek them out. Consider turning any kind of hobby into a money-making business. For example, if you know you're a great artist, then you can open yourself up to commissions. You might be surprised at how many people may pay. A Guide to Getting Rid of Credit Card Debt Just because you feel like you've dug your own grave, doesn't mean you have to stay that way. There are ways of getting rid of credit card debt. Come up with a foolproof plan to tackle it, try to find a lower interest rate, ask for a new payment plan, or just take on a few extra odd jobs. Put your credit cards back in your control. If you're new to the credit card world, you could make a lot of mistakes that will put you into debt without even realizing it. Visit our blog for a beginner's guide to credit cardsChoose a card that will offer you an incentive for signing up. Enjoy the process as you compare one credit card with another.

Many companies give their users a one time reward for joining, along with bonuses for certain purchases. Make sure the card you choose works best with the types of purchases you’ll be creating. Finally, remember to never ever get a credit card if you won’t be able to pay the balance on time.

Create Lifelong Habits

Now you can start taking steps towards repairing your credit. Remember, financial freedom is a lifelong journey, and doesn’t happen overnight. It’s an accumulation of different positive habits, working together to help you achieve your own personal goal.

The Fortunate Investor is proud to be here to help you along your financial journey. Our passion for personal finances is the reason this site exists. To help people, just like you, find ways to build long term wealth.

Are you struggling with large amounts of debt? While debt can create feelings of anxiety, and stress, it also presents an opportunity to learn. Check out our story, about how massive debt changed our lives for the better.