Bad Credit Wizards Discusses Ways to Get Out of Debt Faster

Many of us have unfortunately gone through a phase where our financial decisions were not the best, which resulted in money mismanagement such as overspending, poor budgeting or no budgeting, and excessive debt. This eventually led to significant penalties on our credit reports, causing our scores to essentially plummet. We try to pay these debts down as best as we can, with many of us paying them off, but the needle doesn’t seem to move much regarding our scores. Some individuals may be on the other side of the fence with no credit at all, and no matter what you do, it seems like merchants don’t want to take a risk on you because you don’t have a credit record for them to reference. This results in denials and even hits on your non-existent credit due to racking up several inquiries. As frustrating and worrisome as these issues are, there are available solutions. The key to successfully changing your credit around begins with your firm commitment and full understanding of what’s involved when trying to raise your credit score.

What affects a credit score?

First things first, let’s take a quick overview of what a credit score is comprised of. According to TransUnion, a credit score is calculated based on payment history, the amount owed, length of credit history, and the types of credit accounts owned. Six months’ worth of activity is directly reflected in a credit score. Remember, the higher the score, the better. Feel free to visit each of the following credit bureaus’ websites on how credit scores work. This includes TransUnion, Equifax, and Experian.

Where should you start?

Request your most recent credit report and carefully review it. The credit bureaus are required by federal law to provide a free annual credit report. Look into the details and see if all details are accurate. This includes checking the personal information, inquiries, credit information, and public records. Once an item is inaccurate, raise this with the credit bureau so they can start an investigation. Check for any negative remarks or late payment entries and dispute as applicable.

How does having a credit card help?

Since we have established what affects a credit score, we can link this towards the items that can be achieved by having a credit card.

• An old credit card can be kept to increase your average credit history.
• Make a payment of the minimum amount due ON TIME. Of course, we all know that paying in full is much better to avoid paying high interest rates, but if at that point of adjusting finances, by all means, ensure to pay on or before your due date.
• A spouse who’s agreed to make one an authorized user (assuming it’s on good standing too) will also give the same available credit. Note that it will also have the same negative effect when a late payment happens.
• Opening a new credit card can increase the average credit history. Be aware though that opening up a lot of accounts within two years might not be advisable.

Secured or Unsecured

Credit cards can be one of the ways to help build or repair a credit score. The difference between a secured or unsecured card is one requires collateral such as a deposit and the other does not. The issuing banks use this deposit as a means of protecting themselves in case of a missed payment or delinquent case.

Unsecured Credit Cards

Wells Fargo Platinum Card

• No annual fee
• Perfect for paying down balances because of 0% intro APR for 18 months for balance transfers
• APR will be around 13.74% to 27.24% after the said period
• Enjoy Visa benefits such as Cellular Telephone Protection

Indigo Platinum Mastercard

• $0, $59 or $75 for the first year, $99 thereafter depending on credit profile review
• Offers pre-qualification application to avoid getting a mark on your credit
• Standard APR at 24.90% variable
• Allows application for those who have previously filed for bankruptcy
• Enjoy Mastercard benefits for car rentals, hotels, etc.

An unsecured card is ideal; however, if you don’t get approved, secured cards are available. Is a credit check required for a secured card? Most of the time, it is not required, however, it’s not unheard of. A bankruptcy could cause a secured card application to get rejected. Don’t panic, though. Most secured cards do not require a credit check.

Secured Credit Cards

Wells Fargo Secured Credit Card

• $300 security deposit minimum
• $25 annual fee
• 24% APR variable on purchases and balance transfers
• Great for building or rebuilding credit
• Your credit limit depends on the amount you’ve deposited
• Gives you budget tools to help sort monthly expenses
• Enjoy visa benefits such as emergency card replacement, roadside dispatch, and travel and emergency assistance services

First Progress Platinum Mastercard Secured Credit Card

• $200 to $2000 secured credit line
• No minimum credit score or credit history are required
• Enjoy Mastercard benefits for car rentals, hotels, etc.
• Easy online application

BankAmericard Secured

• $300 to $4900 secured credit line
• No annual fee
• Great for building or rebuilding credit
• Your credit limit depends on the amount you’ve deposited
• Deposit return subject for review on standing
• Standard APR at 25.24% variable

Green Dot Platinum Visa Secured Credit Card

• $200 to $5,000 secured credit line
• $39 annual fee
• Great for building or rebuilding credit
• Your credit limit depends on the amount you’ve deposited
• Enjoy Visa benefits such as emergency card replacement, roadside dispatch and travel and emergency assistance services
• Standard APR at 19.99% variable

Merrick Bank Secured Visa Credit Card

• $200 to $3000 secured credit line
• $36 annual fee
• Great for building or rebuilding credit
• Your credit limit depends on the amount you’ve deposited
• Standard APR at 19.70% variable
• 0% fraud liability for unauthorized charges
• Easy online application

Take time to research

There are more cards available to choose from that could fit your needs. Before taking the plunge of clicking that “APPLY” button, make your comparison, and create a list of what your priorities are when looking for one. Just because a card offers cashback, reward offers, and other promotions do not mean it’s something to take up on right away. Review the possibility of applying for an unsecured card first before going for a secured one.

Create a master list of your finances

Seeing everything in one spreadsheet will greatly assist you in figuring out the balance owed for each type of account, credit limits, due dates, and interest charges. This will not only make one see the scope of work that needs to be done, but it will also help you feel empowered. Once you have a good look at everything on your financial table, it’s time to take steps on helping yourself become more disciplined and mindful. Let’s face it. It can get overwhelming. Having a system that will help ourselves get that routine going will help in slowly getting our credit score to improve.

Set payment reminders

Friendly reminders can sound obvious to some of us, but to have a backup in remembering things due to our busy schedules, will help tremendously. Ideally, this should be set up on your mobile phone calendar since it’s something that’ll be easily accessible.  Have this synced with your computer calendar or set up an email reminder depending on whichever system you’re on most often. If you like writing down on a physical paper notebook/journal, by all means, do so!

Start paying down debt

Applying for new credit will help you increase your average credit history. Don’t get into a trap of using it though for something you’re unable to plan with your income. Start focusing next on paying off any debt you have. Pay off those with higher interest charges first or one with a smaller balance to get one off your debt list a lot faster.

Consult a consumer credit counseling agency

If you feel like you’re in doubt of how to properly manage your finances but committed to getting hold of a better credit score, feel free to consult an expert about it. It’s an ideal opportunity to ask questions, get better ideas, and ultimately, take charge of your finances.

Create small milestones for yourself

This journey can become quite exhausting at some point, so take time to step back and see how far you’ve gone in terms of improving your financial situation. Don’t become too obsessed with your credit report, but it’s okay to set a schedule to review your progress. Checking it too frequently may get you frustrated and potentially derail you from your goals. Mark out your calendars or place a visual reminder for these milestones on your online or physical notes. As soon as you’ve set everything up and are consistently accomplishing each goal (big or small), you’re bound to see your credit score finally improve and achieve the ranking that you seek.