You should understand that restoring and rebuilding your credit takes time and patience and can be very frustrating; however, the benefits can affect your entire life. Did you know that your bad credit could keep your from getting a job? In today’s tough economic times, bad credit affects more than your ability to get loans. It could keep you from getting a job. You should diligently monitor your credit and make sure to dispute anything that is incorrect. Oftentimes, the information on your credit report is wrong; however, if you do not file a dispute, it will stay there for a very long time.
If you have bad credit, I would like to share 5 simple tips to help your rebuild and maintain good credit.
1. Bankruptcy is not the easy way out. Many people see bankruptcy as an easy way out of their debts; however, it is detrimental to your credit for 7 to 10 years. When you file bankruptcy, you might be relieved of your obligation to pay certain debts; however, that comes at the price of your credit. You will not be able to get credit cards, mortgage, car loans and even some jobs with a bankruptcy on your credit. A bankruptcy will follow you for a very long time and is oftentimes not worth it in the end.
2. Keep a record of the money you spend. If you have bad credit and consistently live beyond your means, you should track every penny you spend. For two months, record every single cent your spend. This can help you track down where you are wasting money. For example, many people realize that their $4 cup of coffee everyday adds up. If you buy one cup of coffee, five days per week, that adds up to $20 per week, $80 per month and $960 per year. You could be saving almost $1000 per year from cutting out one cup of coffee per day.
3. Live within your means There are people out there that make 100K per year but are still in debt and have horrible credit. Your credit is not a reflection of your income, but on your lack of budgeting your money. You must create a monthly budget that includes all your expenses and savings and stick with that plan. Before you make any large purchase that is not included in your budget, you need to evaluate the necessity of the item and your ability to afford it. It does not matter if your make $8 or $40 per hour. If you cannot live within your means, you will always end up in the red.
4. Get Insurance You should have health, car, home and liability insurance to help avoid large unexpected costs and medical expenses. Even though it will cost a monthly or quarterly fee, insurance protects you from the unexpected which is a major cause of many people’s poor credit.
5. Monitor your credit You should get in the habit of monitoring your credit. You do not need to buy any over-priced credit monitoring service. Quite frankly, this is something you can do yourself. There are three major credit reporting bureaus and you should pull all three at least twice per year. You get the opportunity to pull these reports once per year for free; however, you can pull your credit as often as you like for a fee. Review each credit report and dispute anything that is incorrect.
