Not many people are awakened to their pathetic credit rating, till they apply for a loan and get refused. A bad credit history means that you simply can't be trusted by lending agencies to pay back the loan you've borrowed from them. Such a reputation can make it very difficult for people to achieve their social and financial ambitions because nowadays, you need to credit for anything constructive â€“ be it buying a new car or starting your own enterprise. The worst part with a poor credit history is that it tends to creep up on you.
How you Unintentionally Ruin Your Credit Score
These are some real life example of how people accidentally screwed up their credit record. Someone I know used his credit card to purchase a car, but even before he could make his first month's payment his company declared bankruptcy and he lost his job.
He was jobless for the next three months and had to depend on his credit card to meet his expenses before he found a new job. This ruined his credit rating to such an extent that it became virtually impossible for him to fix. Agreed it wasn't his fault that doesn't matter to lending agencies and credit card companies who only care for your credit score.
Another buddy of mine got a bad credit credit card from a company that offers such cards to those who have poor credit record. While bad credit credit cards do go a long way in helping hapless consumers fix their credit rating, they cost a lot. For the first couple of months my friend was able to make his payments regularly, he was late in making his third month's payments was charged a heavy amount as late fees. What made the situation worse was that he had maxed out his card and spend beyond his credit limit, which resulted in additional penalties.
The Most Practical Way of Fixing Poor Credit
If you have worked up a bad credit, either get a short term loan or a bad credit credit card and use it only for emergencies. If you have multiple cards then first pay of the debts you owe the company on one card and pay the minimum required amount on your other cards.
As your first step to fixing your credit score, get yourself a copy of credit report and chalk out a plan of action. Don't make the mistake of returning your credit cards thinking that will get you out of the mess. It won't! Rather it will worsen your reputation as a creditor and it will then become virtually impossible for your to fix your credit record. The best solution is as I mentioned earlier is to apply for a bad credit credit card and use it very carefully.
While it can be quite difficult to repair a bad credit record, its not as difficult as some people will have you believe. You also don't need avoid your collectors.