When Covid 19 shut down the country, many people lost their jobs and their homes. Some people found themselves living off credit cards and taking out second mortgages just to survive. As the world begins to heal mentally and physically, people will have to find a way to recover financially as well.
If you are in financial dire straits, you may have thought about filing for bankruptcy. Unfortunately, this is much harder than it once was. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it more difficult to qualify for Chapter 7. It is also not as easy to get credit after a bankruptcy as it once was. People will normally try to repair their credit instead of filing for bankruptcy.
When a person has an overwhelming amount of debt, they are unlikely to be able to pay off all of their bills. There are a few different programs that have emerged over the years that can help you improve your credit rating and change your life. Many of them are available to you even if you are unable to file for bankruptcy.
Run Your Credit Reports and Dispute False Charges
There are three major credit bureaus in the United States. You are entitled to get a free report from each one once a year. When you review the report, you should highlight anything you see that is negative.
If you see anything that you do not recognize, you may be the victim of identity theft. You will want to go through your records and make sure that the credit card numbers match up with the ones that you see on your report.
You may see debts you know you took care of. Once you pay off bad debt, it can take months to show up as paid by your credit bureau. You may see debts that you paid off months ago.
If you see anything on your credit report that should not be there, you will want to dispute the charge with the reporting credit bureau. Each bureau’s website will have a form that you can fill out to do this.
There are some companies that will charge you a monthly fee to assist you with your disputes. These companies are generally run by attorneys who are very familiar with credit law. They will charge you a monthly fee for this service.
Improve Your Payment History
Payment history makes up 35% of your credit score. It is extremely important to make payments on time in the correct amount to have a good credit rating. There are a few different programs that can help you to improve your payment history.
If you want to improve a bad credit score or if you are just wondering how to get an 800 credit score, you can get a secured credit card. All you have to do to get such a card is fill out an application and send in a security deposit. The deposit you choose to give the card issuer will determine your credit limit.
Once you get your card, you can begin making changes. When you pay your bill on time, it will generate a good report to the credit bureau. You should see significant improvement after a year.
If you do not have the money for a deposit, you can apply for a subprime credit card. This kind of card will give you a very small limit and it will charge you a high-interest fee, but it will let you build your credit score. If you make payments on time and pay more than the minimum amount, your credit score should go up.
Change Your Attitude About Money
Although people often have financial problems because of circumstances beyond their control, it is always a good idea to take as much personal responsibility as possible when dealing with finances. There are some good habits that you can get into to improve your credit rating.
You should always strive to pay your bills on time even if it means having to make some sacrifices. You should not overuse your credit card, but make sure to use it once a month or so. Unused credit card accounts will often be closed.
Unless you are having a true emergency, you should never put something on a credit card that you can not afford to pay back. It is never a good idea to buy luxury items on a credit card.
Rebuilding your credit will take some time and effort, but it will be worth it in the long run. Being mindful of your credit rating can help you to get the things you need to live a comfortable life.