Repairing Your Credit History When You Have Bad Credit

You don’t know what happened. It seemed like just yesterday you had your life on the right track and you had the whole world ahead of you. Now you take a look at your situation to discover piles of unpaid student loans, stacks of notices that you’re various utilities are going to be shut off, and debt collectors are calling you for the impressive credit card bill that you’ve managed to rack up. So what happened? Perhaps school, marriage, unemployment, children, or simply life. You aren’t doomed to a life of always playing catch up on bills; there are steps you can take to get back on track. Read below for the steps to take after life happens.

The important thing in getting your credit back on track is to organise your finances so that you have no more issues with missed or late repayments. It is also important to understand how your credit looks, obtaining and reviewing your current credit history is vital. Check for any inaccuracies and also understand where you have gone wrong with your credit (the specific bills).

You can access a free copy of your credit report here. If you are feel overwhelmed or are unable to understand the credit report, get help via a free financial counsellor – get more details below.

Seek Counseling

Oftentimes all it takes to move in the right direction is asking for help in sorting through the financial mess that you’ve gotten yourself into. Whether it is an easy fix such as downgrading your internet or eating out less and budgeting entertainment, a qualified financial counselor can help you sort through your situation and set you up with a budget that will have you out of debt in no time. The counselors will help find easy ways to cut your personal expenses, determine whether you may be eligible for financial assistance, work with creditors to negotiate repayment terms, explain any alternatives you may have, and aid in any financial way possible.

Seek Finances

One big component of repairing your credit history is by re-establishing your credit worthiness and ability to service loans. Essentially getting new credit and showing you are able to make the repayments and pay back the loan in full with no issues. As you access new credit and meet the repayments you are slowly re-establishing your credit history. This is not only restricted to personal loans; it pretty much covers any type of financial repayment (such as utility bills, insurance repayments, vehicle, home, gym, etc)

If you have bad credit, a big issue is the ability to qualify for a loan. Loan options become limited and most people think that they can only qualify for payday loans (which they are wise to avoid). There are actually other lender options which specialise in loans for those with unique financial circumstances. Sites like Low Income Loans Australia, provides information on organisations and companies that will work with loan recipients to secure finances without having to agree to outrageous interest rates or fees. Available options include:

• Advance payments for those who receive Centrelink. Recipients basically just get an advance on their benefits payment.
• No interest loans (NILS) are very small loans of $800 to $1,200 that do not charge interest but must be used on household essentials. This is an emergency loan that may help credit scores as its repaid. This loan is also the most apt to be schemed so applicants should be careful that the lender is reputable and certified to lend money.

In summary

The first step to repairing your credit is to get a copy of your credit report to review, then create and follow a budget that helps you meet all your repayment commitments and establish savings if possible. If issues arise and you need to borrow, look at options outlined here and possibly contact a free financial counselor to make sure you are making the right decision.

Remember that repayments to a personal loan or credit card is only one component of re-establishing credit, being on top or your general bills is also a way to improve your credit.