The worldwide economy has been going through a lot of turbulence. Many people have lost jobs during this period. Since the credit crunch has affected everybody, it is important to adopt some strategies that can help in building and maintaining your credit.
It is vital to point out that restoring credit is not as easy as it sounds. This is something that requires a lot of patience for one to achieve. The process can be very frustrating; however, the benefits derived can have a positive impact in your life. Having bad credit is a big disadvantage as it could even prevent one from securing employment. It is therefore important for everybody to diligently monitor his or her credit and act on any dispute accordingly.
Below are five tips that can assist one in maintaining and rebuilding good credit even with the hard economic times.
1. Bankruptcy is not a solution
Many people view bankruptcy as a simple method of getting out of debts. However, this affects one’s credit for a period of seven to ten years. After filing for bankruptcy, the court will relieve you from obligations of having to pay some debts. However, this relieve has got a heavy price on your credit. It will become impossible for you to secure any form of credit with bankruptcy on your credit history as much. As much as bankruptcy may look like an easy way out, it is not worth it in the long run.
2. Record your spending
With these hard economic times, living beyond your means is similar to committing financial suicide. Everybody should be very careful about what they spend. Keeping track of one’s spending is also encouraged. For a duration of thirty days, record all you spending and analyze where you may be going wrong. It does not make sense to make a monthly income of $ 1,500 and spend 1,800. This implies that you are living on debts. If you minimize on your expenses, you will realize that you can make substantial savings at the end of the year. For example, if your spend $ 5 on coffee daily, this translates to $ 35 each week. This total per month is & 140 and in a year you could save$ 1,680.
3. Avoid debts
The best way to avoid debts is to live within your means. There are those who earn high salaries but never get to enjoy it because they are always in debts. Come up with a monthly budget and stick to it. Avoid very luxurious items that do not really add value to your life. It is worth noting that even those who earn millions can end up in debts if they live beyond what they can afford.
Everybody should strive and have medical, car, home and liability insurance. With this covers in place, one can avoid heavy costs that may come along due to unforeseen incidences. Imagine having to pay damages for someone who was severely inured within your home. Since nobody knows when accidents can take place, it is therefore advisable to have adequate insurance in place.
5. Monitor your credit
It is unnecessary to purchase an expensive credit monitoring service while you can comfortably do it your self. At least twice each year, you can request the credit bureaus to issue you with a personal credit report. In case there is anything amiss, simply file a dispute so that it can be corrected.
Your credit affects even your ability to be issued with the car loans, mortgage and even credit cards . Avoid falling victim to bad credit by maintaining good credit.
Article written by Kathleen Hubert. See more of her work at Auto Loan