Leaving Debt in the Dust with a Bad FICO Score

Erasing your past debts should always be your top priority and if you’ve got a bad FICO score, that should be even more motivation for you to get things in order. Having a bad FICO score will keep you from getting loans of all sorts and your credit score will suffer as long as you don’t take care of your responsibilities. There are many options out there for folks that are looking to get out of debt as quickly as possible. Just because you have a bad FICO score doesn’t mean you’re too far beyond being helped: as long as you seek out the help available to turn your financial problems into solutions, you’ve already made the first step!

Thinking about using credit card

Do Whatever It Takes to Fix Your Credit

There are things you can do in everyday life that will increase your credit score before you even have to consider very serious options. Simply paying your current credit card payment on time in full will begin to reflect your credit score positively. The more often you pay those credit cards on time, the better your credit will be over time.

It would probably be in your best interest to enroll in a professional debt relief program. Debt relief professionals are there to help you settle your accounts with creditors that are past due and even accounts that have been sent to collections can be settled as well. Simply settling your accounts with your creditors can raise your credit score by 100 points or more.

Making sure you pay your current bills on time in addition to getting those old accounts settled will help jumpstart the transformation of your bad FICO score because having accounts listed as current that get paid consistently will negate some of the effects of the damage the past due accounts caused. This could raise your bad FICO score by as much as 50 to 100 points.

These three steps combined could potentially add as much 200 points in no time. Be proactive in raising your own credit score for the best results!

Consolidation Loans Could Get Tricky

Getting a debt consolidation loan with a good interest rate will prove to be very hard with a bad FICO score. Debt settlement will likely reduce your principal balance and this can be a great idea for those with big credit issues.

You could research the upsides of an equity line of credit. You can get a home equity loan for a 4 or 5% interest rate. If you needed to, you could even put your vehicle up as collateral on the loan. Auto title loans are a viable option for those people with somewhat decent credit even after they’ve made attempts in the past to repair their credit score.

You can still manage to find an unsecured loan if you’ve got a bad FICO score but are trying to avoid professional debt relief. Credit consolidation loans are available for those with bad credit that simply want to have one single payment to make each month. The exorbitant 20 to 30% interest rates might still be better than what you’re actually paying on your credit card.

It’s not recommended that you take out another loan to consolidate your bills. Your first focus should be on eliminating your debt and getting a debt settlement can make that a reality.

Avoid These Actions While Climbing Out of Debt

  • You have to be paying your debts off with money you’ve earned. Do whatever you can to stay away from credit card cash advances and payday loans. The high interest rates will really put you out, and you don’t want to repeat the cycle of debt.
  • Pay your bills on time every single month! If you miss even one payment, there could be very serious consequences on the horizon. At the very worst, your creditors could have you sent to court or they could raise your interest rates up to 30%!
  • Don’t take out any new debt. Too many loans is the reason you’re in the mess in the first place and you don’t want to be pushed into bankruptcy.
  • Consolidating your debt is pointless if you’re not getting a better interest rate for all your troubles. Working with a debt relief professional should at best ensure that you get a much more reasonable interest rate.

If you didn’t believe it before, there are ways to get out of debt and a bad FICO score. It will take hard work and you’ll definitely be making sacrifices that you might not have foreseen, but getting your debt under control is most important. Taking baby steps, like paying off your monthly bills on time each time they’re due and pursuing debt settlement, will help you see the changes in a more timely matter. Once you get into a good place with your credit, keep it that way and don’t let poor credit rule your life forever.