With the recent pandemic finally releasing its hold on the economy, many of us are seeing the unfortunate results reflected in our bank accounts and credit scores. While the situation may seem grim, you can take actions to improve your finances. Here are 7 ways to fix your credit.
Examine Your Finances
First and foremost, you need to sit down and take a hard look at your current financial situation. Things to look at include:
- monthly income
- rent/mortgage
- bills
- expenses (groceries, gas, etc…)
- debt
- additional income
Some people avoid diving into their finances because the reality may be frightening. However, if you don’t properly know what you’re dealing with, the situation will spiral even more out of control than it already is. Be honest with yourself and your partner so that you can take the proper steps to improve your finances and relieve the stress of debt collectors and overdue bills.
Consider Hard Money Loans
If you are in a dire situation, a hard money loan may be a good option for you. A hard money loan is a loan that is based on the value of your property. Hard money loans are a good option for people who are at risk of going into foreclosure or bankruptcy or people who don’t have easy to prove income. Unfortunately, interest may be higher than traditional loans. However, this option is made for people who don’t qualify for a traditional loan. Also, the money from a hard money loan can help maintain your current living situation or pay off debt with even higher interest.
Pay Off Debt
Once you dive into your finances, you will know exactly what you owe. Now that you clearly examined your debt, it’s time to pay it off. Call each debt collector to learn your options. Don’t be afraid to ask to pay installments or even negotiate the amount you owe. Make sure to fit repayment into your monthly budget. With time, your debt will slowly disappear, improving your credit along the way.
Take out a Credit Card
It may not seem like the best idea to take out a credit card if you’re looking to improve your credit. You may see it as a risky move. However, it can actually dramatically improve your credit if you don’t have numerous maxed out cards already. For someone just starting out, getting a credit card will add to their credit report. However, it’s crucial not to use max it out right away. You want to leave a little something for emergency situations. Also, contrary to popular belief, you shouldn’t pay the entire balance off every month if you want to improve your credit. Instead, pay about half of it each time. The interest you pay will be worth it when your credit improves.
Hire Financial Consultant
Sometimes, it’s best to let a professional help you. You wouldn’t fix your car by yourself if you weren’t properly trained, and you probably shouldn’t try to fix your finances by yourself if you don’t have adequate knowledge. Talk to a financial consultant who can tell you the best ways to handle your unique situation. Their advice could end up saving you money in the long run, so the expense to hire them is more than worth it. There are financial consultants with a specific concentration in helping people improve credit or get out of difficult situations, but there are also consultants that can help you manage your finances once you are back on your feet so that you don’t find yourself in a precarious situation again.
Monitor Your Credit
Some people don’t even know that they have a problem with their credit until they go to get a loan for a home or a car and get denied or offered an extremely inflated APR. You can prevent this by staying on top of your credit. There are a number of free services out there that provide your credit score and allow you to see the items on it. When something bad hits your credit, you’ll be made aware of it. You can also monitor it to see which actions help to increase it the most. Take your credit into your own hands by signing up for a service and authorizing alerts when there are any significant changes.
Earn More Money
Ultimately, you may need to make more money to help improve your current financial situation and your credit. Ask for additional hours at work. If that doesn’t work, spruce up the resume and put it out there for jobs that pay more. You want to remain loyal to your employer, but if they aren’t paying you as much as your deserve, it’s time to move on. Of course, you should never leave your current job unless you have a new one securely in place. Security is crucial when fixing your credit, and you don’t want to end up with lower income than you had before. You can also look for side gigs that may pad your wallet. You may decide to start serving or bartending on weekends or starting a freelance business. There are a number of options available to you, so don’t wallow in pity or fear. Go out and make more money!
Financial struggles affect 4/10 Americans one year after the pandemic. If you are struggling, don’t panic. Examine your situation and take the appropriate actions to move forward. The progress may be gradual at first, but, with time, you will be able to submit your loan application with pride.
