So, you have worked hard to pay off all that debt… congratulations! Unfortunately, it is still going to take some time to repair your history.
The first step is certainly getting your debt in check. This will open all sorts of doors to financial flexibility in your budget. Not having that huge debt payment each month is almost like winning the lottery!
Still, if you were having serious problems with debt before… it will take some time to rebuild your credit. The first step is to get some sort of installment loan or credit card, depending on your needs.
A loan could have a high interest rate, but it may be worth it to get your credit score back in shape. If you don’t need a loan, then try to get a credit card. In some cases, your credit history is so poor you won’t be able to get a standard credit card and instead will need to get a secured credit card. This type of card is set up with more fees and protected by a savings account, but it allows you to prove your credit stability.
Of course, the next key step is to use your new credit responsibly. With an installment loan, pay if off early and make more than your minimum payment each month. For your credit card, carry a balance… but ensure you always pay it off each month in full. Try to charge no more than 30% of your credit limit.
Recovery from debt problems can take time, but it can be done. Think of the process as steps, with each one leading you down a better financial path. Credit can be a blessing and a curse in today’s world. Those who have learned to use credit appropriately can really benefit from its advantages.
Related Articles:
*Delinquencies and Credit Issues