If you’re coping with bad credit, you’re probably painfully aware of the implications of poor credit reports. You’ve heard about the bad credit horror stories of landlords rejecting tenants, banks refusing a loan, and jobs denying employees all due to a low credit score. While these are all truthfully potential situations, you’re not forever stuck dealing with these ramifications. Wondering how to deal with bad credit? Here are just three of the many options available to you.
1. You Can Repair Your Credit Score
If you have a less than desirable credit score, don’t sit around and let it determine your financial future. There are numerous ways in which you can improve your credit score.
You can begin by paying your existing bills on time, whether that means setting up automatic withdrawal from your checking account or creating phone alerts for when certain bills are due. Regardless of how you do it, make a conscious effort to make these payment deadlines to help prove that you are working toward better money management.
Next, you need start paying back your debt. If dealing with your debt becomes unmanageable, contact a credit counseling organization that can advise you on how to budget and how to create a feasible debt repayment plan.
2. You Can Apply for a Loan in an Emergency Situation
Unfortunately, you will run into difficulties when applying for a loan for a car, business, or property as many banks and lenders won’t want to loan you money if you have a history of not making payments on time. However, if one of life’s emergencies hits you by surprise, you can opt for a payday loan.
Usually you can take out a cash advance loan without providing your credit history, but because of this, these payday lenders charge pricey fees and interest. While this is a good option to turn to if you’re trying to pay for a one-time financial dilemma, such as a medical bill, only apply for it if you have a solid way to pay it back in short order. If you cannot pay it back on time, however, you’ll rack up more fees, more debt, and more interest, which will only cause you additional anxiety.
3. You Can Receive Secured Credit Cards
When you’re dealing with a bad credit score, you’ll probably run into a catch-22 situation. You need to build your credit in order to repair your score, but many credit card companies will not offer you a credit card if you have an unfavorable credit history. Applying for a secured credit card is one way of getting around this obstacle.
A secured credit card comes with a security deposit, which is usually around a couple hundred dollars. If you fail to make your payments, the credit card issuer will use your deposit to cover your dues. The good news is that you can apply for a secured card with a company that will send your new secured credit card history to the credit bureaus, so that your new responsible paying habits will show up on your next credit report. Beware though, because the same goes for if you fail to make your payments, as your negative credit history will be passed along as well, which will only further hurt your credit score. Also keep in mind, failure to make payments will result in hefty penalty charges and interest rates.
While living with bad credit can certainly cause challenges, use these obstacles as motivation to improve your score.
Chloe Mulliner is a writer and editor for several websites dedicated to credit cards, emergency cash advances, personal loans, credit and more. She recently moved across the country from Virginia to California, where she currently writes about all things credit.