As the economy begins to rebound, may individuals find themselves wondering how to survive bad credit. Gone are the days of easy financing and loans with no money down. It appears the days of scrutinizing every loan application are here. What many people fail to realize is bad credit is repairable and it is not the end of the world.
- Order your credit reports. The first step in how to survive bad credit is to order a copy of your credit reports from each reporting bureau. By doing this, you will be able to understand where you need to begin in repairing your credit. Eliminate any incorrect items from the reports.
- Organize your finances. After obtaining your credit reports, the next step in how to survive bad credit will be to organize your finances. By doing so, you will know exactly how much money you have each month to devote to paying off your debts. Then you can make a plan to pay off your debts either in order of smallest to greatest, which will allow you to pay off individual debts faster or by starting with the debt that is costing the most in interest, saving you money over the long run.
- Contact your creditors. If you haven’t already, contact your creditors and see if they have any options to help you survive bad credit. By contacting them and staying in touch, you show them that you are willing to work towards repaying your debts. Maybe they have a hardship deferment that will allow you to skip a few payments and apply that money towards paying off another debt. They may be willing to work with you to either lower your payment amount or your interest rates, allowing you to free up additional funds to apply to your repayment plan.
- Obtain new credit. After your debts are under control, consider applying for new accounts when trying to survive bad credit. This will give you a change to re-establish your credit rating with a new company, as well as decrease your utilization percentage, which can also raise your score. This can also come in handy if the interest rates are lower on your new accounts as you can transfer the balances of some of your accounts with high interest, thus saving you hundreds, if not thousands.
- Manage credit responsibly. The last step in how to survive bad credit is to make sure you manage your new credit responsibly. Many recommend only charging things on your credit card that you can afford to pay in full at the end of the month. If you find yourself struggling, be proactive and contact your creditors ahead of time to work something out before things get too difficult.
By taking the proper steps, anyone can survive bad credit that may have happened as a result of the economy or medical bills. Remember, bad credit isn’t the end of the world. In fact, more people may be wondering how to survive bad credit than you may be aware of.