Devise your own Credit Repair Plan
You found yourself in a very bad financial situation. You may feel emotional, hopeless, guilty or all of them. You are afraid of hitting rock bottom. Before that happens, you need to take the necessary steps to get your financial life in order. You need to look long and hard at your credit use and spending habits. It doesn't mean a "debt consolidation," program or a home equity loan .The word is PLAN.
First of all, you are going to need to collect all your credit reports, credit card and bill payment records, mortgage and loan information. It is likely that some of your repair activities will be going on simultaneously. Debt worksheets are available online to help you.
Make sure your credit reports are accurate. This may involve some written communications with one or the other of the three major credit bureaus. Be persistent.
ALL of your financial obligations must be recorded in writing. This will be important for the money management part of the plan. All credit cards can be listed according to highest to lowest interest rate. Write down the minimum monthly payment on each card.
After this, you are going to look at the picture of "disposable income" and "discretionary income." What are these? You have a certain amount of your salary that pays for your necessary expenses such as loans, utilities, mortgages, insurances, and credit cards. This is disposable income. Subtract the total from salary and this is discretionary income which is the amount you have to assign to reducing debt.
Decide which credit cards, and loans that you will pay down in order. For the first one you decide to pay down, pay as much more than minimum as you can. Pay the minimum on the others. When the first is paid off, start applying that same amount to the next debt in line. It won't be a fast process.
To immerse yourself in this change of pattern of handling money, you need commitment and will not feel comfortable for awhile. Lifestyle changes are needed. You will need to cease unnecessary spending, buy only essentials, avoid travel, eat at home, pay bills on time and stop charging.
The bottom line of the situation is that you are responsible for creating it. There is no credit angel. You need to fix it and use smart money management techniques to maintain your repairs.
First of all, you are going to need to collect all your credit reports, credit card and bill payment records, mortgage and loan information. It is likely that some of your repair activities will be going on simultaneously. Debt worksheets are available online to help you.
Make sure your credit reports are accurate. This may involve some written communications with one or the other of the three major credit bureaus. Be persistent.
ALL of your financial obligations must be recorded in writing. This will be important for the money management part of the plan. All credit cards can be listed according to highest to lowest interest rate. Write down the minimum monthly payment on each card.
After this, you are going to look at the picture of "disposable income" and "discretionary income." What are these? You have a certain amount of your salary that pays for your necessary expenses such as loans, utilities, mortgages, insurances, and credit cards. This is disposable income. Subtract the total from salary and this is discretionary income which is the amount you have to assign to reducing debt.
Decide which credit cards, and loans that you will pay down in order. For the first one you decide to pay down, pay as much more than minimum as you can. Pay the minimum on the others. When the first is paid off, start applying that same amount to the next debt in line. It won't be a fast process.
To immerse yourself in this change of pattern of handling money, you need commitment and will not feel comfortable for awhile. Lifestyle changes are needed. You will need to cease unnecessary spending, buy only essentials, avoid travel, eat at home, pay bills on time and stop charging.
The bottom line of the situation is that you are responsible for creating it. There is no credit angel. You need to fix it and use smart money management techniques to maintain your repairs.
About the Author:
With unprecedented problems in the credit markets it?s more important than ever to have excellent credit. For more information check out Rob Kosbergs' Detailed FREE Guide on Maintaining and Repairing your Credit Score by going to Bad Credit Repair for your FREE information.
posted by Credit Counseling at
11:21 AM
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