Some people are struggling with bad credit because they don’t have enough money to cover their basic expenses, or they are so overwhelmed with debt that they are having trouble covering the day-to-day costs of living. In these situations, a loan probably will not solve your problem, and you may consider contacting a government-approved Credit Counseling Agency to determine what other options are available for you.
If you have enough money to cover your basics and you have bad credit due to poor borrowing habits or unlucky circumstances, you may want to take a few steps to improve your credit. These steps are recommended regardless of whether you choose to get a loan right away or not, because they will help you control your credit use and improve your financial well-being.
Credit is a major part of our economy, with many people relying on credit to buy homes, cars or to pay for school. Unfortunately, very few schools teach about credit, so many people learn about credit the hard way - by ruining it first. Learn about credit so you can control your credit use and make educated decisions about how you spend your money.
Start to control your credit by researching different financial terms and learning how loans work. Once you realize how much of your money goes to pay just interest when you borrow money, you may be less inclined to make impulse purchases with credit. You will come to find that relying on a savings for emergencies, as opposed to a loan, can save you money.
Sometimes we get into bad habits without realizing how they impact our credit and, therefore, our loan options. For instance, many people don’t realize that using up 90% of your available credit hurts your credit score. This is because lenders are under the impression that you rely heavily on your credit and that you cannot repay your debt.
You can easily improve your credit by paying down the debt you owe to 30% of the credit limit. Learn all the different factors that determine your credit score so that you can control your credit use and make a positive impact on your credit report.
Many people argue that tracking their expenditures is unnecessary because they know exactly what they spend their money on. The truth is it’s easy to overlook the small things we may be spending our money on - especially if you don’t want to cut back on these things.
Tracking your expenses is a way for you to see your money habits on paper. You may be more inclined to make changes when you see how much money you are spending on any one thing.
It was bound to come to this. You want to have enough to cover the things that keep us alive and healthy: food, shelter. But after covering the basics, cut back on unnecessary items, especially if they will have little value in the future. Using your money for purchases that appreciate (accumulate value) is more effective than spending your money on items that quickly depreciate.
Cutting back allows you to control your credit use and encourage wise spending decisions! Reevaluate your financial goals so that your attempts to cut back will be more meaningful. Instead of considering cuts as a loss, think of them as steps toward your goals to improve your credit and make the most of your money.
There are plenty of reasons to start saving. You can use savings for big purchases, such as furniture or vacations. Building a savings account will give you time to decide if you really want to spend your money on a vacation or new end tables. You may end up liking the extra zeros in your bank account.
Relying on a savings will enable you to control your credit use - you won’t have to look for loans or credit every time something comes up. Instead, you can rely on yourself!
Financial experts recommend having a small savings for unexpected expenses, a larger savings for long-term emergencies and third savings for long-term goals. It may be hard enough to consider building up 1 savings account, let alone 3, so the best approach is to start small. Save for smaller expenses first and then expand your savings to encompass other goals, like retirement. If you're in a pinch then apply for a bad credit loan here.
Smaller savings are meant to assist you should costs come up unexpectedly that need to be paid, such as car repairs, saving you the trouble of searching for loans or assistance. Experts recommend having $500 to $1,000 for these types of expenses. Don’t have that? Start setting aside $40 each month and you’ll have $480 saved up within a year.
The long-term emergency savings are intended to help you in the event of a medical emergency or job loss. You should have enough in your long-term emergency savings to cover 3 to 6 months worth of living expenses. Once you have a smaller savings built up, start to create your long-term emergency savings. It’s better to have 1 month’s worth of living expenses saved up than nothing at all. Don’t fret about how little you have saved; keep positive and focus on how much you can save.
Long-term savings are meant to cover expenses in the future that you can plan for, such as retirement or college education for your children. Though these goals seem far off, it will be easier to build up a savings account if you start now. In fact, starting a retirement plan as early as in your mid 20s can increase your savings power. The sooner you start, the more time you have to save and any interest made on your savings can be compounded over time.
Haven’t started savings yet and you are well beyond your 20s? Better late than never. Start to set aside money so that you can pad your retirement. Any social security that you can rely on may not be available for people in their 20s, which is why they should be more inclined to start saving now.
Learning about finances and credit can be overwhelming. Keep in mind that understanding credit better will allow you to make wise-financial decisions that improve your credit and save you money in the long run. Make the process less overwhelming by creating goals! Make sure your goals are realistic and achievable, and start small so you can see your progress in the near future.