Credit Management - what to do if you have bad credit
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I have been living a cash only
existence for about two years now. That's right, no credit cards
whatsoever. And you know what? It's great. I can honestly say I'll
never use another credit card again. It really hasn't been that
hard. Most things that you would use a credit card for you can
substitute by using a debit card. At least with a debit card you
never receive a monthly bill and there is no interest. Furthermore, by using only cash you defund the credit card companies. I don't know about you but I think those companies are right up there with the oil companies. Just like a drug pusher they knowingly enslave people using teaser rates, getting people hooked and then upping the fees, rates and conditions. Stop funding them!
If you absolutely need to borrow money, ask a family member or a friend to give you a loan. Make sure to draw up a contract so that there is no misunderstandings later. If you have no one that you know personally there are people out there that will loan you money that are private lenders. With a little legwork you will be able to get a loan, the terms might not be that great but you will be able to get one.
However, the best course is to pay cash, it can be done, it has been done and you can do it! We have become addicted to credit so there might be some slight withdrawal pains but like any addiction time and persistence win the day.
If you are renting an apartment, tell the landlord up front that you have bad credit and that you are willing to pay several months forward in order to offset the risk and that you have several references (if you can get them) to testify to your character.
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To rebuild your credit rating, save up
some money and take out small secured loans with the bank..don't even
use the money, repay them after paying 6 or 7 payments. Repeat with
that bank
and with different banks increasing the loan amounts as you
are able. Over time your credit will improve. Make sure you get your
credit report and if there are any derogatory items that you dispute,
write a letter to the agency (watch the video below for the proper way
to do this). After your credit has improved stick with credit unions,
don't use credit cards ever again and stay away from banks. This advice is for those who even care about their credit rating, personally I say forget about it! Just live a cash based life and you will be a lot happier not to mention free-er.
To be perfectly honest, there are probably more people out there with bad credit than ever before. This can be to your advantage. If you explain to a potential landlord or employer what your circumstances are, because so many are in the same boat, you may just be able to fly in under the radar. Most people are understanding and if your bad credit was due to a medical problem or job loss they may take that into consideration.
Finally, it's not the end of the world if your credit rating sucks. The credit card companies and Suzie Orman et al would like you to believe it is because they care about you but really they have a vested interest in keeping you on the treadmill, paying those high interest credit card rates and bankrupting you. She has personally made millions of dollars shilling for the credit card companies. Don't listen to them, do what you have to and move on, you'll be fine, you'll see.
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You're very sweet, thanks for writing Vladimir
I got rid of my last credit card two or three years back. I've gotten to the point where I only own on my on my house and some tax stuff from hurricane Katrina.
It's astounding at how much more money I actually have. Great advice!
I know, it's amazing how great it is to be free.
Brie, you're awesome! All these methods are tried. And true.
Thanks Dan.
Your advice is sound but the pain of withdrawal from credit will be too great for most. America is the land of stuff, and choices, and "must haves." Coupled with a 24/7 bombardment of advertising the human spirit ultimately succumbs. I am firmly convinced that this country suffers from mass depression. People are not happy unless they have something new to hold. Like a cheap drug the euphoria lasts a short time then some other pointless trinket is purchased -- nearly always with credit. Then the customer walks out with head down, frowning knowing that the next day the cycle will repeat itself. Only a few will have the guts to follow your advice.
Yes, we are the children being led by the Pied Piper...for sure. But, whether we like it or not reality will come...today with the stock market plunge was a little taste of things to come.
Great tips Brie, I use a debit card rather than a credit card these days. It's safer than carrying cash and less expensive than a credit card. This free debit card I use also has a free credit builder feature which is unique. http://hubpages.com/hub/Prepaid_Debit_Card_Custome
Paying in CASH is useless. I have credit cards that cost me nothing to use because there are no fees and I pay in full every month.
Now what I get from the cards if great record keeping for the IRS and for any warranty issues I have.
Lastly I get miles or points that cost me nothing so I fly for free and I just got a $1,600 camera lens courtesy of a credit card points system, not to mention the 5K in points I used to buy a new car.
One card allows me to use my points towards a new car or for car repairs.
Again let me repeat ALL FOR FREE.
You pay cash and get nothing in return I pay my bill in full at the end of the month and get free points.
How smart are you now.
My points come from the stores I purchase my goods from, they pay the fee to the credit card company and the credit card company pays me a kick back in the form of pints.
Here's an example. You pay cash all month and spend let's say $1000.00, right. I charge all month that same $1000.00 but at the end of the month I write one check for $1000.00. I just earned 1000 points towards SOMETHING - you earned nothing.
Now I also have the ability to dispute a charge if something I buy is defective and the store is forced to deal with me. Paying cash the store tells you to pound sand and there is nothing you can do.
Now on one credit card when I buy something I get DOUBLE the warranty of that item FOR FREE and this has saved me thousands of dollars alone with new electronics that failed after the ONE YEAR warranty from the mfg.
No, sorry, paying cash is a suckers bet unless you have no will power.
I am sure there will be lots of perks for getting an RFID chip in your right hand or forehead too!
Brie , I read some of your articles,I think I just fell in love!
Wonderful, I hope I can live up to your admiration!
Bob wrote;
" Now I also have the ability to dispute a charge if something I buy is defective and the store is forced to deal with me. Paying cash the store tells you to pound sand and there is nothing you can do."
I call BS. Reputable retail stores will compensate when merchandise is defective. If they don't, the manufacturer will in most cases.
Yes Vik, they are always trying new schemes to enslave you
Got rid of credit cards many years ago. I keep a free checking account which is used basically to cash checks against. Also have a dept. store card which is rarely used but paid off before bill even arrives when used.
I view dealing with banks as donating to them and that's a no no
Good for you sluggo!
WHAT MEANS TO TAKE OUT SMALL SECURED LOAN WITH THE BANK, YOU SAID STAY AWAY FROM TAKING CREDIT. AND, ADDITIONALLY, WHAT MEANS TO REPAY IT AFTER PAYING 6 OR 7 PAYMENTS? THANKS, GEAT BLOG!
Yes, I said that but in order to rebuild your credit score that is one way to do it. Take out the loan but pay it back right away...that way your credit score will rise.
Thank for the informative post. Debt settlement is, in fact, a perfectly legal solution for consumers who are in deep and seeking an alternative to bankruptcy.
So this is a good help for people who are drowning in unpaid bills and desperately looking for a way out. This could help a lot to choose the right debt settlement company.
Thanks for writing Nevis Debt.
Thanks for this advice, I am on the road.
Vladimir Uhri Level 5 Commenter 2 years ago
Brie. Wonderful advice hub. Thanks. I am using credit card for practical reasons. I do not to care cash. I am never late to pay. To others I consult to get sizers and cut the card(s).
:) You are great.