It doesn’t matter how you did it, getting into debt is going to cause you some problems. However, don’t’ despair because there are ways that you can help yourself to get out of debt and repair the damage done to your credit history.
- Draw up a list of income and expenditure and work out a sensible repayment plan. Contact all creditors with a proposal for repayment – you might be surprised how many take you up on your offer. Some money is better than no money to these companies.
- Keep new repayments plans up to date. Missed payments have a bad effect on your credit score whereas, if you keep your payments up and clear your debt, your score will improve.
- If you are going to seek the services of a debt counselor, make sure you do your homework first. While there are many good ones, there are also some bad apples in the basket.
- Keep the outstanding balance on your credit cards as low as possible. This will raise your credit score quite a bit.
- Make sure any repayment plans are agreed in writing. Verbal agreements can be denied or gone back on. When your debt is repaid, ask each company to get in touch with the credit bureaus and let them know.
- Try not to use credit cards. Stick to cash if possible. If you really cannot avoid it, make sure you pay off the balance of your card as soon as you can.
- Check your credit history regularly. If you spot any mistakes, do something about getting them rectified. Send any evidence you have to the credit agency, preferably registered post and ask them to investigate the mistake.
- If you have more than one credit card, get rid of all but one. If necessary transfer all your balances to one low interest card and work towards clearing it as soon as possible.
- Think about applying for prepaid credit cards. You can get into debt and they do improve your credit score.
- Make sure your credit card bill is correct and get any mistakes rectified immediately.
- Credit counselors are a good resource to use to help you plan a budget and restructure your debts.
- Be wary of adverts about instant credit repair. It doesn’t work and it just costs you more money in the long term.
- Consider an installment account to help try and repair your credit. Make sure you can keep up the minimum monthly payments on it.
You can do many things to try and repair your credit score and work out an affordable way of living in the future. You could think about speaking to your bank and seeing if they will reduce your overdraft or the credit limit on your credit card. The less credit you have, the less you can spend and the less trouble you can get into. Be careful that you don’t go too low though as this may not look good, especially if your credit cards and overdraft are always on their limit.