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Financial Options For Someone With Problem Credit |
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If you are having problems with credit or
difficulty paying monthly bills, you might be tempted to turn to businesses that advertise quick and easy solutions to your problem with credit. But do not be misled. There are no instant solutions. There are some credit counseling businesses that claim to guarantee results or your money back. But these invariably have hidden strings attached to the deal or they usually disappear when it's time to give your money back. There are two ways to solve your problem credit. You can either do it yourself or seek the help of a credit repair company. If you want to do it yourself, you can do so by reducing your other expenses, even if it means making hard choices or changing your lifestyle to fit your income. If you have a second car, you should consider selling it. Some other ways to solve you problem credit is to apply for a non secured signature loan, to borrow money from a relative, to cash out your 401K/retirement benefits or to sell family heirlooms, jewelry, and so on. Then there are the professional companies to help you solve your problem with credit. These companies offer debt consolidation loans, debt counseling, debt reorganization plans, or other type of credit help. But, if you do not select your company with caution, you might end up with worse credit than when you started out. If your debts are under control but you want to improve your credit history, the most important factor is to make your monthly payments on time. To stay away from future problem with credit use preaddressed envelopes enclosed with your statements to mail your payments, and call the company if you don't receive your usual statement. Also send your payment as early as possible since most companies calculate interest on a daily basis. So the sooner they receive your payment, the less interest you'll have to pay. But if you're worried about making payments, contact your lenders immediately to tell them that you'll have trouble meeting the monthly payments. Don't take money from your retirement account or your life insurance policy to pay bills or living expenses. This might have serious implications in the future that you might not have considered. It's best to get the advice of an expert before you take any major financial actions. You can also approach mortgage professionals for help and advice. But, be prepared to honestly discuss your problem with credit with a mortgage professional. Responsible mortgage professionals know that there can be legitimate reasons for problem with credit, such as unemployment, illness or other financial difficulties. And, once your problem with credit has been corrected and your payments have been on time for a year or more, your credit can be considered satisfactory. Another organization that you can go to for help for your problem with credit is the Consumer Credit Counseling Services (CCCS). CCCS may be able to help you pay off your debts, as if you were in a Chapter 13 bankruptcy without actually filing for bankruptcy. But, if CCCS won't take you, you might need to consider bankruptcy. Bankruptcy should be your last option. Since creditors are starting to tighten their credit requirements, you may have a tough time getting future financing, if you file for bankruptcy. To solve your problem with credit, you can file for two kinds of bankruptcy, under Chapter 13 or Chapter 7. Chapter 13 bankruptcy gives you up to 5 years to pay off your debts. Claiming Chapter 13 bankruptcy takes longer than a Chapter 7, but your credit will have better standing. The disadvantage is that you're in bankruptcy for up to 5 years plus your credit report will record it for 7 years after you have finished paying off your debts. Chapter 7 bankruptcies are the best solution for those seriously in debt that they will never be able to repay it. But from a credit standpoint, this bankruptcy is the least desirable. The disadvantage is that this shows on your credit report for 10 years from the date of filing the bankruptcy. However, it is convenient in the sense that you don't have to repay any of the debt. |
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