It’s not easy to obtain a positive credit rating especially if you already have a bad credit. But messing up one time doesn’t mean that you can no longer correct your wrongs and build a better credit standing.
Here are steps that can help you make a lasting change in your credit standing:
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Identify financial problems that require your attention.
The first order of business when trying to solve your credit rating issues to identify those things in your financial life that can’t be changed. For example, you recently got divorced and in a deep financial mess-you can’t change it. You are in a mess-but identifying this can help you find ways to do something about it. Actually facing the problems and identifying them by the way they affect your finances can be painful at first. But, it can empower you to identify those issues in your life that needs to be addressed. Oftentimes, we are so overwhelmed with many issues that we fail to see the exact problems that are actually causing the biggest impact in our finances.
In the example given above, a divorcee in a financial mess can identify the financial problems easily if she lists them down depending on their impact. Let’s say, the family income is reduced by 50% because the husband left already and all she has is her salary. While she’s still waiting for the child support, she has to adjust her monthly budget to deal with current living expenses, child care, children’s education and outstanding bills.
“Who pays what and how much is due” could be a good starting question. Are all those debts in your name? What are the new challenges that need to be addressed immediately? Write them down one by one and you may be surprised that the financial problems are actually manageable.
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Make an honest and fearless inventory of your wants and needs
Have you ever tried doing a self-examination-an honest one that would reveal the deepest fears about being in debt, and not having enough money to meet your goals? Know what you want and identify the things that you really need. Doing this is an important step in budgeting, if you can spot which of these things that you frequently spend for are actually your wants instead of needs, then you can easily let them go.
By identifying what you fear the most-financially speaking, you can start moving forward. You can use that fear to embrace your ability and accept your inability to cope with certain events in your life that are causing some financial issues.
For example, a person who always competes with his neighbors–throws a party when they do, buys a car when they get one and buys clothes they wear will never be satisfied. It is because his happiness is based on the feeling that he is able to compete with others. The fear of being left out is the primary cause of his debts.
Now, how will you cope up with those fears? By making an inventory of your needs-you’ll understand the basic things that you really need to spend on. If you can eliminate your wants and prioritize your necessities, without being bothered by your fears, then you can stick to any budget you make. This inventory will help you-
- Get to know yourself and your priority in life
- Explore the connection between your fears, needs, wants and debts.
- Understand that obtaining a postive credit rating and living a financially stable life is possible.
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Prepare to actually make fundamental changes in the way you spend money
Having identified what wants to let go and needs to focus on, you are now ready to actually make essential changes in your daily life. You have to consider letting go of old borrowing and spending habits, define your financial resources to meet those needs, permit your ‘new financially responsible self’ to emerge.
In the previous steps you identified your fears that are causing you to spend more money that you need to. You also learned about the harm that it caused you especially in the area of finances. You are now ready to change your old and unhealthier ways of spending money as you desire for better financial conditions and positive credit rating. Now that you are ready for change and to move beyond those fears, it is time to make an action plan-which leads us to the next step.
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Take action.
Having made the decision to improve your credit rating and your finances, you now go into action and take responsibility for all the errors you made. This step means, you have to-
- Get your credit report and check all the debts you incurred. Review them for negative listings, such as unpaid debts, maxed out credit cards, old accounts that you never bothered to pay off and all bills you failed to repay.
- Work on paying for your outstanding financial obligations. You can apply for debt consolidation, or any other type of financing options that could help you pay off defaults as much as you can.
- Check negative entries that do not belong to you or those that are actually paid off, but were reported late. Dispute them by calling your credit provider or send a dispute letter to the credit reporting agency itself.
- Fix your credit through DIY Credit Repair. Find out more on how you can achieve a positive credit rating for good, by making an enquiry today!