Having a bad credit can be the beginning of a nightmare. But as difficult as it sounds you can turn it around and escape the down spiral. Here are 5 easy ways you can get out of the bad credit trap.
1. Take Stock Of Your Debts
In order to start getting out of bad credit you’ll need to know what you’re up against. This means gathering all the debt you have and putting them on paper.
Collect all the bills and accounts and make a list that includes the creditor’s name, how much you owe (balance), the interest rate and the monthly due date and minimum. You can also check and see if it’s payable with your monthly take home income minus the necessities.
Getting out means you’re ready to be more financially responsible. Even if it means less trips to the restaurant or spending less on your favorite hobby, the end result is worth it.
2. Always Be On Time – Automate Your Payments
One of the things people should know about credit recovery is that they should start making their payments on time. When you don’t make the minimum payment on the said due date, more interest charges are added which makes paying the debt off more difficult.
Sometimes it’s as easy as writing down the due dates on your debts and having it taken out automatically from your bank account or paycheck. The good news is that it’s possible, thanks to technology such as apps and companies having the option for automatic payment.
If you can’t automate with your bank, call the company you owe money with and ask if they offer the feature. Then, you just have to make sure that you have the money and they’ll take care of the monthly obligations for you.
3. Settle Costliest Debts on Priority
To pay off your debt faster you’ll want to have the least amount of interest charges and eliminate late fees and other penalties.
By paying on time you eliminate additional charges, but what about interest? This can be solved by prioritizing the balance that has the greatest interest rate and focusing your money to paying that balance off first.
It’s a sound strategy and one recommended by financial experts. The costliest debts are eliminated, which gives you more breathing room as time passes. The debt gets easier to handle, and you’ll be more motivated because you see the end goal in sight.
Alternatively, you can opt for debt consolidation by putting all your owed balances into one. You pay one minimum amount on one set due date which makes things simpler. You also have a chance to succeed in your endeavor as long as you remember to pay and budget your income right.
4. Get a Payday Loan for People with Bad Credit
If you’re constantly finding yourself short on budget and still need to pay a lot of bills, there’s an option to get a payday loan when having a bad credit.
There are different kinds of payday loans on the internet, but the one you should focus on are those that allow people with bad credit to get money. Whether for debt consolidation, as financial relief or for much-needed repairs, you can apply for them online and get the results in as fast as a few days.
Once approved, you can use it to pay off the balances owed and get your credit score up due to your activities. Remember to pay it back on the agreed due date and with the minimum amount so you can continue with the progress and get approved when you need money again.
5. Look for Ways to Increase Your Income
Bad credit isn’t immediately solved with more money, but it can help as long as you’re set on recovering your credit and taking it up to a good score.
Nowadays there are plenty of ways to increase your income. You can start freelancing your talents and skills on the internet, do gigs or projects for cash, become an Uber driver, sell stuff you have lying around or get a second and temporary job.
Having a bigger income means you’ll be able to pay off your balances sooner. You won’t have to pay as much interest and can get back on your feet sooner.