Unlike the old adage about leaving things that work alone, some things really are broken and do need fixing. Like poor or bad credit. While there are many reasons to eliminate all your credit card debt, keeping your existing credit good, is important for the times you really need it. Namely, for being able to obtain the best interest rate possible for your large and important purchases: your house, your car, your education.
But let’s assume that for any number of reasons, you lost control of your credit card activity, or keeping up on payments. Your current credit score will reflect that or any credit misuse. If that is your situation, you’ll want to correct and rebuild as quickly as possible.
The good news is that there are several ways that you can restore both your credit and your credit score. The bad news is that it won’t happen overnight. In fact, any “fix your credit fast” offer will probably only “fix” the bank-roll of the person or company offering it. Fixing your credit is a process. It takes time; oddly, more time than it took to ruin it!
Getting Your ‘Poor Credit’ in the Black
The first step in getting your credit back into good standing is to find out just what shape it’s in now. And taking a hard look at your current credit report might be the most difficult part of the process. Until you see it in black and white – names and numbers, you might be able to comfort yourself in the thought that it’s really not that bad. And perhaps it’s not. But usually when you have a stack of unopened Visa and MasterCard bills, or you pull that plastic out of your wallet and hold your breath, waiting for purchase approval then your credit is probably not stellar.
However, the better reason for viewing your credit report is not to punish yourself for ignoring the warning to “never spend what you don’t have”, but you should look for errors. Errors happen more frequently than you might think. Incorrect late payments or accounts that aren’t even yours need to be found and corrected. And this is one thing you can and should do quickly.
Next, since late payments are one of the biggest issues in damaging your credit, you might consider enrolling in an automatic monthly payment plan set up with the credit card company and your bank – easy peasy.
Pay an extra $20
One of the most obvious, but not so easy peasy steps is to stop using your credit cards altogether. That’s difficult, considering that if you’re at the point of repairing your credit, it’s likely you’ve made a habit of overusing your cards to begin with. So instead of such a drastic move, pay just $20 extra to your monthly payment. This might seem small, but an extra $20 can significantly start your debt reduction snowball.
Finance Everything the Right Way
At Paradigm Life we tell our clients to finance everything. We don’t suggest you spend money you don’t have with someone else’s credit line i.e. credit card companies. What we do suggest is finance everything you buy with your Whole Life Policy. Because you can borrow against yourself with a policy loan and pay yourself back, the only person earning back that interest is you – not a credit card company. By utilizing your policy with purchases you are essentially your own banker and lender. This is how wealthy people stay wealthy, and stay in control of their personal economy.
Bill Fagergren
Read: The Whole Truth about Whole Life
Infographic: Infinite Banking Basics
Watch: The Financial Climb
