What To Do If You Have Bad Credit

Have you found yourself in a situation in which you have bad credit? This is not a great place to be in financially, and it is best to take whatever steps you can to avoid it. However, many people fall into the trap – and once you are there, you are there and have to learn to move through it. If you have bad credit, all is not lost for you! There are things that you can do to improve your situation, and to eventually have you credit rating restored. It will take time and will require you to spend a lot of time planning and strategizing, but it is certainly possible to clear your financial name completely.

Pay off your existing debts

The first thing you will need to do is to work out how to pay off your existing debts. You want to be able to start building your credit up again, but you will need pay off whatever is outstanding first. If you have gotten yourself into trouble and have received bad credit, it can actually get worse, so you need to tackle the problem immediately. Work out a very strict budget – this is not the time to be taking holidays or splashing out on a new television. Cut out any luxuries that you can live without and plan to only spend your money on the basics. Work out where you can save money – can you buy food cheaper from another location or by using coupons? Can you car pool with others to save money on travel? You need to cut as many expenses as you can to give you as much money as possible to pay off your bills. You should then set up a direct debit system with the bill collectors – have the money debited straight from your account every month so that you do not have to worry about it. You might also want to look into debt consolidation – that is, bundling all of your debts into one that is paid off by the month. The consolidation company will pay off all of your debts for you, and you will owe them that sum. Be aware that you will have to pay interest on this consolidation loan, so make sure that you research interest rates and other applicable information before you sign up for this sort of loan.

Resist temptation

When you are in a lot of debt it can be a very stressful time. You might feel like your life is only spent working and paying bills, and that you are bored and frustrated with the strictness of your budget. It is natural to feel this way, and it is natural to want to splash out on some retail therapy to make you feel better. But this is a big mistake, and probably what caused you to get into debt in the first place. You need to be careful to resist this sort of temptation so that you are always moving forward, not backwards into more debt. It is a good idea to avoid the places where temptation lies, such as shopping malls. There are plenty of places that you can go to have a good time that do not involve spending a lot of money! Why not take the family to the beach for the day – this is a lot of fun and completely free. You could take a walk in some lovely free gardens, or visit a free exhibit at a museum or art gallery. Check out the events guide in your city – most major cities have events all throughout the year that are free to attend and are a lot of fun. Just because you are in debt does not mean your life has to be boring, it just means that you have to be smart about the way you live it.

Get a credit card

This might sound like a ludicrous idea. Getting a credit card when you have been in debt is something that many people will tell you not to do. However, this can be a very smart step towards gaining your good credit back. You will not likely be able to get a normal bank credit card if you have a poor credit rating, however there are options open to people with bad credit that you can look into. If you use this credit card – very sparingly – and make all of your repayments on time, it will demonstrate that you are able to control your spending and your finances, and this will help you in the long run towards being trusted by another financial institution.