It is commonly believed that defaults could significantly ruin your credit score and it would take seven years for you to fix bad credit. Instead of feeling over the hill, I encourage you to read on and discover inspiring ways to start over financially.
Why defaults damage your credit score
Defaults have a huge impact on your credit report, and they will be kept on record for up to 7 years from the default date. It doesn’t matter if it’s just a few cents or a thousand dollars. The point is– your potential creditors, employers and anyone interested in your credit report will see the record of your account; which was closed by your lender because you repeatedly missed payments. Even if you have paid a default, the default date will remain the same, and it will still come off your credit report. It will just be updated to show that the default was satisfied on a certain date. The same rule applies to debts sold to debt collectors.
But the problem is—many borrowers complain that they have not received a default notice. It’s because while it’s good practice for lenders to remind payments, they don’t have the legal obligation to notify you that they intend to default your account and that they will record your default on your credit file. This is because there is a presumption that you know the consequences of missing payments based on the terms and conditions of the loan; and when the lender informs you that this could happen when you opened the account. The only exception is that when the default recorded on your account is inaccurate, or the default was issued under a Consumer Credit Act.
Let’s start over…If you are ready to make a big change on your finances, here are tips to help you start over in life and enable you to let go of the thoughts and things that are holding you back.
Evaluate what kept you from repaying your debts on time
Starting over means knowing the reasons why you messed up in the first place. It could be because of poor financial planning, inaccurate credit report, and inability to stick to a budget or a spendthrift lifestyle. Whatever it is—it made you unhappy and that is something that you may want to change. Unless you address the areas that caused your current situation, you can never move forward. Look at these reasons as a part of your past—let go of them and move forward to the future.
Eliminate anything that gets you stuck in a debt rut
Building credit means making 100% of all your payments on time, carrying a credit balance not exceeding 30% of your credit limit and not opening too many new credit accounts at the same time. It also means keep your oldest accounts open for as long as possible to build your credit age. On top of it all, building credit is possible when you always check your credit reports every year for possible errors and discrepancies. Doing so will help you repair your credit using DIY Clean Credit Repair Kit when applicable.
Own up to your responsibility and choose to do it for yourself
You don’t start over with your life as a way to repay your debts or to avoid creditors and credit collectors from bombarding your door. Own your decision to start over financially for your sake.
The first step to do it is to accept the fact that you have contributed something to this mess. The second step is the hardest part—to live exactly within your means. It means spending your earnings wisely—for your necessities and your debts. If you’re just being able to make your credit card payment or personal loans, it’s time to do something so you can pay your balance in full. As you consistently pay the balance on your account in full each month, you also avoid using cards to make ends meet. The only time you need to dip into it is during emergencies or when it is not convenient for you to carry cash, like when you are travelling overseas.
Save money in a profit-generating account
Don’t spend every dime you earn on things that won’t give you any financial return. For example, if you spend money on an expensive cup of coffee each day, why don’t you invest the same amount of money in the stock market? While it is risky, it is still far better than drinking it all away. Another strategy is to set up an automatic cash transfer to an investment fund each month—keep your goal to 10% of your earnings or higher.
Look ahead to a brighter future using DIY Clean Credit repair kit. It helps you discover the things in your credit report that keep you from moving ahead in life. Make an enquiry today!