Effectively repairing a bad credit history, what does it really take?
In order to truly address poor credit history, you have to accept the fact that you ended up in the current financial mess as a result of the bad choices you have made financially, thus far.
"Credit buying is much like being drunk.
The buzz happens immediately and gives you a lift....
The hangover comes the day after.”
- Joyce Brothers |
Taking full ownership of your role in perpetrating your current financial scenario, and gaining a clear understanding of your spending patterns and behaviors, is an essential part of managing change successfully.
After all, what you have done so far, hasn’t worked out so well for you, right? There has to be a change in your spending patterns and financial and credit behavior if things are ever going to get better.
Change, is the key to repairing a bad credit history, and preventing further damage to your financial health. The factors that have led to this situation may be due in part to events outside your control, but most likely you could have better addressed those issues if your behaviors up until that time were financially sound, fair enough?
Addressing all the underlying causes can help in your efforts to repair a bad credit history and changing your financial life for the better.
Poor financial management is usually a major reason that one finds him or herself in excessive debt.
You should consider if:
- You inevitably end up spending more than you earn
- You fail to pay all your bills on time
- You pay only the minimum due amount on your credit cards
- Your borrowings are more than you can repay
- You live beyond your means
- You don’t have enough savings to cover any temporary financial emergencies
- Your answer to all money problems is to borrow more money
- Family members are not open about their spending and bill-paying patterns resulting in nasty surprises
- You demonstrate compulsive behaviors, like addiction to gambling, drugs or alcohol, compulsive shopping, etc
Another cause, and contributing factor to poor financial status, can be sudden and unexpected life events, which can throw your credit out of whack. These may include:
- the death of a spouse
- a divorce or a separation
- or a change in employment status
- maternity leave
- disability leave
- being fired
- being laid off
- having to quit your job to care for an ailing family member
- having to quit your job to relocate
- unforeseen medical expenses
People with enough savings are better able to weather these unplanned changes in their financial situation.
Heavy debt impacts both your financial and emotional welfare. A large debt burden strains family and personal relationships and increases emotional stress. So what can your do to help yourself?
Take the right simple steps to repairing a bad credit history and to better manage debt.
- Set up a household budget detailing your monthly income, and your monthly expenses.
- Don't continue to accumulate debt. Pay cash or use a debit card where possible.
- Save a little money every day.
- Prioritize repayments beginning with the most expensive, paying off high-interest balances first, and then directing freed-up money towards the next highest.
- Ask creditors to reduce rates. Be honest and assure them that you are trying to pay. A creditor might reduce rates to avoid defaulters.
Now here’s a thought… what if you forget all about repairing a bad credit history and just decide right here and now that you will work to pay off all your debt and live debt free for the rest of your life? How would that feel? It is possible!
"Running into debt isn't so bad.
It's running into creditors that hurts.”
- Unknown |
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Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
