A wise man once said: “You don’t know what you’ve got until it’s gone.” When it comes to credit repair, the credit expert says that goes double. The easy advice is to avoid going too deeply into debt, and always make your payments on time. Unfortunately, fate sometimes gets in the way of those well-laid plans, and it becomes necessary to begin the process of building a good credit score all over again.
The credit recommends the first step in any attempt to repair credit is to make an honest assessment of how deep a hole you are in. There are really only two hole depths that matter.
The first is a hole so deep that one of the bankruptcy options is the only realistic way of ever standing on firm financial ground again.
The second is a hole that you can escape from by cutting back, and diligently paying off your debts in full over time.
The credit expert says that many people are attracted by a third option that is frequently touted by various credit repair scammers, which is to settle one’s debts for an agreed-upon discount with the lenders.
This is, unfortunately, somewhat of a trap, the credit expert explains, since future prospective lenders regard a settlement deal as little better than the outright default of bankruptcy, yet the borrower is still forced to suffer financial sacrifices just to make the honorable attempt at working things out. From a moral standpoint, this is certainly commendable. From a financial one, it makes very little sense, and can actually leave you in a worse position than a declaration of bankruptcy.
Sound Credit Expert advice
Supposing that the hole is one that can be crawled out of with sacrifice, the first step is to set up a plan of action. If you have a house payment, this is absolute priority number one. These payments must be made in full, and must be made on time all the time. Let everything else go, says the credit expert, if necessary, but make that mortgage payment without fail. Several years down the line, a string of faithful house payments adds up to higher scores. If you qualify for a house, you qualify for everything else. Keep this option alive if you possibly can.
The credit expert advises, the next step is to list out all of your other debts. Include two subcategories with every entry. The first is the interest rate, and the second is the monthly late payment penalty fee. This serves as a handy prioritization guide. Make the minimum payment on those debts that have the lowest interest rate (other than the mortgage) and on those that have the least murderous late fee. Concentrate your efforts at eliminating the one bill that has the highest interest rate first.
Honest Credit Expert Advice
Think of it this way says the credit expert. If you were bleeding to death from several stab wounds, you would place the first tourniquet on the wound that was bleeding the most. In cases of financial bloodletting, stop the most deadly threat first. Compound interest can mount up astonishingly fast at very high credit card penalty interest rates. After this dragon is slain, attack the next most dangerous one, and so on down the line. This is never a fast process, but it offers the surest way back to financial health.
If, on the other hand, your income has been reduced and your bills have mounted as you attempted to ride out what was supposed to be a temporary storm, it may well be the case that the numbers have no way of adding up, short of winning the lottery. This leaves you with the two-headed monster of bankruptcy to select from. In Chapter 7 bankruptcy proceedings, all assets above a fixed figure known as the Homestead Exemption are sold, and the proceeds divided up among the estate’s creditors. After that, you start over, but have that bankruptcy filing on your credit record for ten years.
In Chapter 11 proceedings, you file to reorganize your debts and adhere to a court-approved payment plan that will partially repay the creditors. This is the avenue to pursue if you have a house that can be saved. If you are a renter, or have already been foreclosed upon, go Chapter 7 and clean house.
The credit expert advises that when it comes to knowing how to repair credit, the most important factor of all is time. The damage inflicted on a credit report does not go away immediately. The slow climb back up to being considered a good or better credit risk also does not happen immediately. Keep in mind that the sooner you stop harming your credit score and start pursuing actions that increase it, the faster it will get better. Today is therefore a much better day to begin than tomorrow. Here are a few simple steps to get you started on the road back.
Convenience of a good credit rating
Credit is a wonderful tool of modern life. Use it as a convenience when you find a super deal on something but lack the cash in your pocket (but not in your bank account) – advice from another credit expert. Make money with credit by using it to advance your money-making enterprises. Perhaps you have a lawn-mowing business, and need another lawnmower so you can expand and make more money. Stay away from using credit as a luxury, or to purchase items that do not make you money. Above all, remember that time is of the essence in all matters concerning credit. The faster you can place yourself in a position to make your payments on time, the sooner your score will begin to heal and grow. Whatever course you may choose, the credit expert says to act swiftly and with unshakeable resolution to succeed.