If only you were rich and didn’t have to secure that extra credit card in college. Sigh. Girl, we’ve been there. Bad credit will literally ruin your for life, but it doesn’t have to.
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Financial stability and security is something most adults desire. The unfortunate reality for many of us, however, is that by the time we reach “true” adulthood, we’ve made some costly decisions that impact our credit and our financial future for years to come. If you’ve had trouble managing your debt as a result of poor choices or unfavorable circumstances it can be difficult to know exactly where to begin in order to make a change. Whether you’re struggling to pay back your student loan debt, looking for a way to repair damaged credit, or even searching for ways to maintain the healthy credit score you have already begun to build, these ten tips will get you moving in the right direction.
Tip 1- Don’t Ignore Your Debt
“Out of sight…Out of mind” are not words to live by when it comes to debt. Ignoring your debt will not make it go away. In fact, neglecting to address your financial and credit issues only makes matters worse. A better approach is to list all of your debts so that you have a clear and realistic picture of your financial situation.
Tip 2- Obtain Your Credit Report
In order to repair your credit, you must know exactly what is in need of repair. The best way to find out is to request a copy of your credit report directly from the credit bureau. According to the FACT Act, all U.S. citizens are entitled to one free copy of their credit report each year. This report will list your debts and payment history. This one simple step is the perfect place to start to repair some of the damage done during those young, wild, and free college years.
Tip 3- Study Your Own Credit History
There are three major credit reporting agencies that can provide your free annual credit report: TransUnion, Experian, and Equfax. Take the time to carefully review your credit report. Look for information that may be inaccurate or flat-out false. If you find yourself feeling overwhelmed, LuxuriousCREDIT.com can help simplify the process. You have the right to challenge and request to have any erroneous or unverifiable information removed. This may seem intimidating initially, but you CAN do it!
Tip 4- Speak The Language
When managing your credit, credit report, lenders, agencies, financial institutions and the like learn to speak the language of credit. Spend time with individuals who work in the credit and finance industry. Get a second opinion when necessary or reasonable.
Tip 5- Plan To Pay
Next, determine how much you can afford to repay each month until you have paid off all that you owe. By developing a repayment strategy you put yourself in control. Stick to your plan and pay your bills on time! Late payments are harmful to your credit.
Tip 6- Develop A Budget
Many people face financial hardship and even crisis at some point. Your situation doesn’t have to go from bad to worse. Take control of your finances by getting real with yourself about your spending. Make a true assessment of how much money you have coming in and going out every month. List your income from all sources. List your “fixed” expenses such as rent or mortgage, food, transportation. List your variable expenses such as clothing, entertainment, and recreation. Analyze your spending habits, prioritize your spending, and create some financial goals.
Tip 7- The Will To Win
Before you attempt to effectively execute your new budget, take some time to record your current spending habits and trends. After a week or two, take a step back and look at where your money is being spent. Ask yourself, Is my spending truly aligned with my beliefs and priorities? Sticking to a budget requires a strong will. Once you determine your priorities, be disciplined so that your spending reflects what you truly value.
Tip 8- Credit Cards
The stereotypical starving college student barely has money for food, let alone the means to keep up with the latest fashion, tech, and pop-culture trends. Some do without. Others have just “gotta have it!” A department store card here, a credit card there and before you know it you’re up to your neck in credit card debt. Think of credit cards as a type of high interest loan. Although you don’t feel it when you swipe, it is NOT free money. Credit card debt will eventually have to be repaid, typically with sizable interest. Use credit cards responsibly.
Tip 9- Student Loan Debt
Being a college student requires a great deal of hard work, discipline, commitment, and money! There are countless benefits to a college education, but let’s be honest, it’s not cheap. Most college students can reasonably expect to graduate with thousands, if not tens of thousands of dollars in student loan debt. If not managed properly, this debt can have a devastating impact on your credit and your future. A smart move, if you have both credit cards and student loan debt, is to go after the credit card debt first.
Tip 10- Pay Smarter, Not Harder
The best way to tackle debt is to simply dive in, head on, and begin to pay. However, as mentioned above, every smart consumer has a plan before attempting to maintain or repair credit through repayment. Dedicate the bulk of your available funds to your high interest debt first. The interest rate on your credit cards, for example, are likely much higher than the rates on your student loans. If this is true for you, tackle the credit card debt, and protect your credit from the nasty effects of high balances and missed or late payments, by paying off the most expensive debt first. What this means is, work to pay off the balance on the debt with the highest interest rates first while maintaining the minimum monthly payments on the others. Then tackle the next highest interest rate, and so on until your debt is wiped out! It’s that simple.