Bad Credit Report? Five Tips to Get Back On Track with Finances
You just got your credit report back, and it’s not looking good. Before you can qualify for a mortgage, afford a car loan, or be free of debt, you’ll need to get your finances in order. Here are 5 tips to getting your finances back on track.
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Pay Bills on Time
The first step to getting rid of bad credit is to stop adding to it. Make a promise to yourself that you’re going to start paying your bills on time. This might mean sacrificing luxury items you’re used to having every month or keeping a closer eye on the budget, but make the necessary adjustments in your lifestyle to accommodate the due dates on your bills. Here are a few suggestions for easier on-time bill payments:
- Organize your bills: put them in a file cabinet or create an excel sheet that will help you track which you’ve paid and when the next ones are coming due.
- Set up automatic billing through your bank.
- Write due dates on your calendar.
- Open your bills immediately—don’t just toss them on the junk mail pile or file them unopened.
Avoid late fees and added stress by paying your bills in a timely manner.
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Make a Budget
Do you have a budget? If not, it’s time to create one. Sit down and experiment with a few different budget programs until you find one you like. There are plenty of free options online, such as budgetsimple and youcandealwithit. A Microsoft excel sheet will work just as well.
Once you’ve found a program that works for you, create a budget that will let you break even or even add to a savings every month instead of building a deficit. This might mean cutting a little into the clothing budget, planning a shorter family vacation, or even downsizing or trading in your vehicle for a cheaper option.
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Stop Using Credit Cards
Again, stop adding to your debt. Pull out all of your credit cards and decide which ones are helping and which are hurting you. Here are a few tricks to reducing your credit card usage:
- Put them away. Don’t carry them around with you—keep them in the bottom of a dresser drawer or a file in your fireproof box to make them harder to use.
- Better than stowing them away, just close them. Call your provider and cancel the cards—if you’re using them unnecessarily and then failing to pay them off on time, your credit score is going to drop. Remove temptation by canceling them completely.
- Leave them at home. If you have to pay cash or come back for the credit card to make a purchase, you’ll think twice about how badly you need that item.
- Reward yourself. Every time you resist a credit card purchase, reward yourself with a little treat (keep it on the inexpensive/free side, otherwise you negate the point of resisting the purchase!). Hey, the rewards system works for the kids; it’ll work for you too!
If all else fails, just take a minute and calculate how much interest you’re actually paying on your credit cards per year. The amount might shock you into putting away your cards for good.
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Talk to a Professional
Don’t wait until you’re in over your head to talk to a professional financial advisor. A C Waring & Associates Inc., a financial office based in Canada, offers consumer proposal options that will help you get out of debt. Financial advisors will be able to talk to your creditors and come to a resolution that will benefit both them and you. Creditors are often more willing to be lenient with your payments if they know you’re taking steps to correct your financial situation.
A professional advisor will also be able to help you set up a budget, provide you with valuable online resources and software, and offer years of accumulated financial wisdom. Don’t feel embarrassed about visiting an advisor—they’re there to help, and they might make all the difference in your journey to financial success.
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Be Patient
Credit doesn’t build back up overnight. You’re going to have to be patient with yourself. Bad credit doesn’t last forever, and over time it will slowly disappear from your credit report. Just keep making smart financial decisions, and don’t give up just because your credit doesn’t seem to be getting better fast enough.
Don’t get discouraged. The path to financial stability is a long and sometimes painful one, but with the right determination and diligence you’ll be able to raise your credit, pull out of debt, and keep your finances in order.
Category: Credit
