If you’re still in college or just getting ready to graduate, you’re probably like most students and have a large amount of debt accumulated. Everything from student loan payments to car loans and everything in between, it can be easy to quickly fall behind. If you’ve had to support your lifestyle off of a credit card, the long term effects can be harsh. Poor to bad credit can make it impossible to get a new loan and in many cases even a job. If you’ve been blanketed by a mound of credit card debt, here are a few things that you can do now to help you rebuild and pay down your debt.
Don’t Apply For Cards With Lots Of Hidden Fees
Many credit card companies have hidden fees and interest rates. The rates may seem low, but read the fine print. After so many days or months, they skyrocket—making your payment high and difficult to manage each month. Activation fees, annual fees and processing fees can also make your monthly payment high and challenging to pay off your debt. Choose a card that attracts consumers with low credit scores or problem credit. Look for cards that may offer a security deposit to secure the account for a specific time frame. Many credit cards for people with poor credit offer a match credit line in lieu of a security deposit. This may a good option for you to get your credit back on track.
Consolidate Your Credit
If you’ve accumulated a large amount of credit card debt, it can be hard to make the payments affordable. If you miss a payment, the late fees can quickly accumulate and additional finance fees can make it impossible to pay off your balance. Consider consolidating your debt by:
- *Applying for a low- interest rate card and transferring outstanding balances to it.
- *Opening a personal loan with a zero to low introductory interest rate and transfer all of your high-interest credit card balances.
- *Entering into a debt management program to teach you how to control your spending.
- *Utilizing a debt consolidation agency to bundle your credit cards and negotiate terms with your lenders.
If your credit has already suffered and some accounts are in default, it can be impossible to get a new card. Instead of adding more debt, try speaking with your credit card companies to rework an affordable payment plan. Paying smaller amounts each week may be one way to help you pay off your debt load faster.
Ask About Being An Authorized User
Do you have a parent or close relative with good credit? If so, you may be able to apply to be an authorized user on their credit card account. This works by getting permission from the cardholder to add you as a user. From there, you’ll get your own card. Any spending that is done on the card you hold will be reported to a credit reporting agency. While you won’t be able to transfer balances from your own card to the authorized card, you can slowly build up your credit as long as you use the card responsibly.
Bumping Up Your Credit Score
One of your main goals if you’re young and already have bad or troubling credit is to increase your credit score. Your credit score or FICO is something that most lenders will base your creditworthiness on. The score ranges from 300 to 850, The higher your score, the better you appear to lenders. This means you should strive to improve on:
- *Total amount owed on your cards
- *Newly opened credit card accounts
- *The length of your credit history
- *Types of credit you have
- *Your overall payment history
Paying down anything in default or arrears is the first step in reversing your bad credit. Over time, getting caught up on past payments and paying off high interest cards will help you get your credit back on track.
Avoiding Future Credit Card Usage
If you have credit cards that have defaulted or you’re skimming by on making minimum payments, don’t obtain more credit. Stop spending down on available balances and avoid obtaining any new cards or revolving accounts. Deactivate your cards if you’re tempted and pay off more than the required monthly payment each month.
Utilizing several techniques will help you achieve freedom from debt and get you on back track with a solid credit history.