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Steps to Repairing Your Bad Credit History

Bad credit affects millions of people. The long-lasting effects of a bad credit history can take a toll on your family’s ability to buy a new car or home even years down the road. With the presently changing bankruptcy laws you need to make certain that you maintain whatever good credit you have and take strides to repair your past credit history the hard way.

There are several ways to help repair you credit, however they all take time, sometimes years. Even if you don’t plan on trying to obtain a mortgage or car loan at this point, you may want you may want to prepare for the future by starting now. The better your credit history is when you go to make a large purchase, the easier it will be for you. The first step to repairing your credit is to pay off all of your current bills on time. Each time you hold a past due balance it lowers your credit score. If you do not change your bill-paying habits your score will continue to drop and all of your other efforts will have been in vain.

Another major step that is absolutely vital to repairing your credit is paying off any remaining debt that has been reported to a collection agency. You can call those companies and arrange a payment schedule if you don’t already have one. You need to allot some of your monthly income to repaying this debt. If you have trouble balancing your budget you can seek out services through a low-cost or non-profit credit counseling organization.

If you want to try and create your own plan here are a few simple steps to follow. First, gather your pay stubs and bills from the previous month. Determine how much you bring home and how much you spend on current bills each month. Remember to factor in money for food, gas, diapers, or whatever else your family needs on a regular basis. The remaining balance is what you should put toward paying off past debt that is plaguing your credit report. If the remainder happens to be almost nothing or is a negative balance you may need to re-think how your family spends money and see if there is anything that you can cut back on, such as cable TV or cell phones. One important thing to remember is not to take on more than you can handle. If you try to pay off old debt too quickly, by using money that you need for current bills, those current bills may also be put into collection and all you will accomplish is further damage to your credit report.

After you have completed the first two steps you can now apply for a secured credit card. These are credit cards specifically designed for those with bad credit. It usually costs to apply and participate in the program. What happens is you put money in a frozen account and your limit will be anywhere from ½ to all of that amount. The company uses the money in the account as a safety deposit in case you do not pay your balance. Once you have successfully been on the program for some time they may allow you to slowly increase your balance to more than what is in the frozen account.

Now you are more than half way there. The biggest step is obtaining and maintaining a real credit card. Above all else make sure that you use the card and pay the minimum balance every month, but don’t pay it completely off. If you get one but never use it that won’t help you in the eyes of creditors. They want to know that you can handle making payments, just having a card in your name is not enough.

Over time the you will build a good credit history that will overshadow your flawed past and open up doors in your future. Just envision that beautiful home your family will one day have and it will make the slow and tedious road of credit repair easier to walk down. In the end it will all be worth the time, effort, and sacrifice you put in to it.




This article was written by Julie Bonner.