Debt Problems
What Can You Do To Repair Your Credit And Boost Your Credit Score?
Credit repair is something that can make a big difference for you. There are a lot of things you can do to improve your bad credit report so that you appear to be not only credit-worthy but worthy of a promotion or worthy to a potential soul mate. Yes, even your love life could be impacted by your credit history.
Because credit is such an important factor to people today in terms of their ability to reach their goals, a lot of people now talk about credit history when they are building a relationship. Your poor history could make you less than attractive to a person you are interested in building a future with because it could hamper their goals and plans.
Note: Time doesn’t really heal all credit wounds. Even if you’ve laid low long enough that seven years has passed, you still need a good credit score.
Here are some credit score boosting tips to help:
- A secured / pre-paid credit card. You pay the credit card company a deposit (they usually keep the interest) and you pay fees to use it as a normal credit card. They report to credit bureaus that you pay your bills on time. You can get two or three types of prepaid credit cards in Canada, for instance. Consider Home Trust Secured Visa and Capital One Guaranteed Mastercard, for help. (Note: Debit cards or pre-paid credit cards typically do not report to credit reporting agencies.
- Check your credit history with TransAmerica and Equifax to ensure that there are no errors. You can also work to negotiate with bad debt lenders listed to pay off your debts. Some will agree to update the file once you’ve paid off your outstanding balance.
- A car loan can help. Only do this if you aren’t out of your depth with your finances (i.e: you are solvent) and if you buy a car you can afford. Car financing companies will often approve bad credit car loans but generally with a high interest rate and often a sizeable deposit will be required. If you shop around for a good deal and stick to a payment you can afford, you will probably help your credit. Be sure to deal with a financing company that does take the time to report payments monthly.
- A secured loan. If you have collateral, you can often obtain a loan that you can use to boost your credit score.
Time can heal things and making payments on time will help. Do be careful you don’t sink into an abyss of debt in an effort to make your credit report look better. Consider living on a cash budget such as with the money jar budget and be sure to use credit wisely.
Get out of Debt Tips – How to Pay Off Your Debts Fast
How to Pay Off Your Debts Fast
How to Pay Off Your Debts Fast
Are your debts dictating your happiness in life? If you are living pay to pay and are tired of living with debts and interest eating up a major portion of your wages, you can make a few quick decisions that could have a lasting impact on your finances — in a good way. Here are some tips:
Cut Up Your Cards
Credit cards are nice in theory but in reality are dangerous in the hands of someone struggling financially. It’s so tempting to use them to buy what you want and even what you need but the reality is that when you live with the credit cards at the max, your monthly payment isn’t ever going to make a dent in the debt. The best way to get debt-free is to live on a cash only budget.
Live on Cash
Cash is king; it’s true. Not only does cash buy more for your money (because you won’t be paying interest and convenience charges) but once you pay for something, it’s yours. No chance of being repossessed and zero chance of you paying more than the ticket price because unlike the people who buy on credit, you know precisely how much things will cost you. There’s a big error that many credit card holders make. That is buying things on sale with their credit card. Unless you are willing to pay that item off in full on the statement due date, you will pay more than the regular non-sale price because of the interest accrual.
Make a Budget
Budgeting is the best way to make money last all month. You need to realise every pound on that budget and account for it. If you don’t have money to get a takeaway for dinner, don’t do it. Ask your budget first! Account for every bit of your spending, your debts repayment, and your savings. Make certain that part of your budget includes debt repayment. Minimum payments are not enough. You need to be aggressive to get rid of those high payments.
Put Money Away
Paying off your debts fast is a good idea. It will result in your having more of your own money to live on. As you pay off debts, take money that would have normally gone to a credit card or loan payment and put it away for the future. Too many people just absorb extra money into their spending money. By all means, celebrate on occasion and live a little but account for that celebration money as part of your budget.
Set Goals and Measure Them
By setting goals, you’re more likely to attain them. It is not enough to say you want to be free of debts. By making a workable plan and sticking to it, you have a great chance of reaching success sooner. Don’t hesitate to get help getting debt free. There are many services that are designed to help.
Compass Debt Counsellors can give you valuable advice that can help you pay off your debts.
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The Payday Loan Trap
money jar
Getting into a payday loan trap is easy —the payday loan companies make it easy to get a loan until payday but the problem is, you can become ensnared in a web that feels all but impossible to escape. How do you get payday loans paid off so you can free up more of your own income? It’s not easy once you’re ensnared but it is possible and the sooner you do it, the more money you’ll have to live on!
How payday loans work
Basically, you can borrow money against a future pay. The interest rate tends to be quite high. (Many payday advance companies have interest rates so high that it seems as if it’s ‘legal’ loansharking!). When your payday comes around, you can either pay the loan off and walk away, OR (here’s the dangerous part) you can pay just the interest on that loan to carry the loan forward. That’s where the trap happens because it’s much easier to just pay the interest and continue the loan.
Because the interest rates are typically so high, you leave yourself short if you pay off the loan. It’s far too easy to take the easier route and pay interest and plan to pay it off ‘next’ pay. Next pay turns into the pay after that and the pay after that and before you know it …it’s months later and you’re still running to the loan place each pay to hand them a sizable chunk of your money.
Multiple Payday Advance Dangers
The above scenario happens a lot. That’s what many payday loan places are hoping for because it’s much more profitable for them if you continue to pay them interest every two weeks rather than pay back your original loan. And because so many of these places are out there, it is easy to carry multiple payday loans at a time. Why does that happen? Many find it so difficult to keep paying that interest payment every pay that their cash flow dwindles and they become even more strapped for cash so they feel powerless to do anything but take on an additional loan. Before you know…it you could be paying off hundreds a month and running around town every pay day juggling things to keep it together.
Here’s a pay scenario:
Ms Jones borrows $800 from the local payday advance store for 2 weeks. At the end of two weeks, she pays them $130 in interest to keep the loan going. It’s either that or give them $930 —which would wipe out more than 2/3 of her paycheck. She does this again two weeks later and is really having trouble making ends meet. So she runs to the payday place two blocks away (or finds an instant online payday place that pays instantly via PayPal) and borrows $600 so she can make rent.
In two weeks she owes them $700 so instead she pays them $100 to keep that payment going for another two weeks. Now, every two weeks she’s paying out $230.00. That’s $460 a month of her hard earned money that she’s just giving away.
How to escape the payday loan treadmill
If you’re running and running but never reaching a destination, you need to do something drastic — and quick! Here are some suggestions:
- Let the payday loan companies know you can’t continue the loan. You might have to open a different bank account and move your paycheck there. Some of them will put you on a payment plan. And this might hurt your credit rating but the temporary issue might be all you can do. When you get them paid off, don’t ever borrow another advance again. Many won’t do a payment plan that doesn’t involve interest and penalties so this might not be the best option for everyone, depending on where you live and what your contract states.
- Bite the bullet, so to speak, and live in poverty for 2 weeks. Pay your full loan off and just suffer through being really poor for a few weeks. Live on Ramen noodles, leftovers in your freezer, and just get through it until next payday. It’s going to be tough, but to free up hundreds of dollars a month in interest fees will set you free!
These payday advance companies look like they exist to get you out of a jam but in reality, they’re happiest when you’re on that treadmill, paying them money every two weeks for the rest of your life. Many will offer loans to seniors on a fixed income or people on a disability pension. How on earth are those people going to get out of the trap? The temporary break typically only lasts a brief moment before the reality of mounting debts and incredibly high interest rates set in. These loans are designed to get you out of a quick jam but the ulterior motive is to fleece you for as much of your hard earned money as possible. If you’ve never had a payday loan….find another way to get out of that jam.
Other tips: Start budgeting for a rainy day as soon as possible and setting money aside for unexpected expenses. Live on cash instead of credit and you will eventually be financially secure. Delve deeper into this blog and check out the money jar budget system. It’s a great way to help get out of debt and put money away for the future.