Living with a Bad Credit Rating

Sometimes life throws you several curves and no matter how hard you try, you can’t seem to keep your head above water. For many people, this, unfortunately, is a way of life. They live from one paycheck to the next and basically have the monies spent before they receive them. Because of this, you end up paying your bills late or even miss a few payments. As a direct result, your credit score takes a hard hit and that just makes matters worse. The good news is that there are things you can do to get off the vicious cycle and start enjoying life.

Living with bad credit

When you have a poor credit score you end up paying more than someone with a good credit score. It’s harder to acquire a mortgage, a car loan, a personal loan and credit cards. On top of all that, if they do give you the loan or the line of credit, the interest rate is very high. Unfortunately, in today’s world, your credit score affects other areas of your life as well. Many insurance companies will not take on new clients with a bad credit score and the same applies to your job prospects, many of the larger companies now view your score as a judgment of your character. So it’s more important than ever to improve your score sooner rather than later.

Where to turn for money

When you live paycheck to paycheck it’s only a matter of time before you can’t cover a bill. When this happens your car payment is late, your loans are late and your credit cards too. The problem is that once your credit score is lowered, most typical bank lenders will not grant you a loan. Luckily, there are still loans for people with poor credit available out there. Many online companies have short-term loans available with repayments from 6 months up to 2 years. This can give you the funds you need to get back on track and resume making your payments on time.

Importance of budgeting

While the short-term loan offers a quick-fix for your current situation, it is not the solution to your problem. The ultimate way to fix this and end the week-to-week style of living is to get on a budget and stick with it. Many people who eventually make late payments on their car, home, and credit cards, made enough money. It was the managing part of it that caused them to default.

The first thing you’ll need to do is clear off a table or desk and gather up all of your bills. Then, on a sheet of paper, list each of them. Once you have all of them listed then you need to add in regular monthly expenses like food, gas, school and essential supplies. Add all of these up and then deduct your net income after taxes. Hopefully, when you deduct your income from your expenses you make enough to cover everything. If this is the case, then your problem lies with your spending habits. If on the other hand, you don’t bring in enough to pay all of your bills, then you need to reduce your overhead or acquire a second job temporarily until you meet your obligations.

Paying off debt

With a plan in place, you can reverse your bad credit score and recover. It will take a little time, but it will happen. For now, you need to make every effort to pay your mortgage, car payment, personal loans and any other extended credit by the due date. Second, you need to start living frugally in order to get the debt paid down faster. This means that you’ll have to give up things like the morning coffee on the way to work, limit eating out to once a month and purchase only the things you need. If you do this for a few months, you’ll soon start to see that you are easily getting from one week to the next without a problem.

Living with bad credit costs you more than an embarrassing loan denial. Today, your credit score is your worth to many companies and that means it can prevent you from landing a new job, getting a cell phone or even renting an apartment. Make every effort to get back on track as soon as you can. Throw a little extra to your credit cards, focusing on the one with the highest interest rate first. Also, learn to tuck money away for a rainy day so that when something does need your attention, you’ll have the money to fix it without touching your bill money.