The economy today is awful. This is far from news to anyone who has not been living under a rock. However, this economic downturn has had grave repercussions for individuals who had probably assumed they had more time to set things straight and recover. These individuals are those with bad credit. People with bad credit are not bad people. Sometimes they are people who lost their jobs and . fell behind on payments. Sometimes they are people who were not able to make money the way they had been promised. However, bad credit can be devastating. This article seeks to explain how someone's credit is assessed, and what can be done to fix damage once it has occurred.
Ah, the magical credit score. Have you ever wondered where those numbers come from? What about your credit report? Do you sometimes get curious about just what people are reading into on that report they seek out before you are employed, or purchase a car? Well, your credit is comprised of a number of things.
One aspect that people look at is your hard debt, or the larger amounts of money owed with a structured pay schedule, like a mortgage, car loan or student loan. These types of debt are usually handed out after a review of your credit, so their presence on your credit report does not necessarily indicate bad credit in general. However, if you have missed a payment or are late with your payments, that can indicate that you have bad credit.
One of the worst things for you is to have a lot of revolving debt or soft debt, like store issued credit cards. If you have a sizable amount of accounts, you are seen as a lending liability. Even if you pay off those cards on a regular basis, the fact that you use them frequently can cause you to have bad credit.
So, you might have bad credit. Most people will, at some point in their lives. However, that does not mean there is nothing you can do about it. There are several steps you can take to remedy bad credit. First and foremost, get rid of as much debt as possible. Start with your soft or revolving debt, and pay off each of those credit cards, starting with the one with the highest interest rate. Once you pay it off, if it has not already been closed down, be sure to do so. While having no form of soft credit can hurt your credit as a whole, it is worse to have a lot. Keep one or two open, but leave the rest.
The second step to getting rid of bad credit is to catch up on your hard debt payments. Talk to your lenders. Sometimes they'll be able to get you on a workable payment plan that will help you from getting any more black marks on your credit report. Finally, make sure you maintain healthy spending habits. It is all too easy, once you've gotten rid of your debt, to accumulate more if you're not careful. Just think back to the days of collection calls. Do you really want to relive those?
Bad credit is not a terminal illness. It is sometimes difficult to understand what goes into it, but now you now what all of the financial babble means. If you can follow these steps, you may even be able to turn your bad credit into good credit. In this economy, it is well worth the effort to at least try.