Credit Repair Pull Out of Your Downward Spiral

Author : Brad MorganYou know the danger You know your weakness But those pre-approved credit card offers keep looking at you seductively from your mailbox

Everyone should have a credit card for emergency use, you tell yourself It just makes sense You hang on to one or two of these offers, just in case you decide to get one

They tempt you with excellent terms - no annual fee, a great APR for the first year, zero percent balance transfers, high limits You can even design your own card or personalize it Imagine carrying around a camo credit card? Or one adorned with stars or puppies? Just for emergencies, though

It would be foolish to pass up such a great deal, so you apply for a card You’ll use it wisely this time

After a few weeks of telling yourself that you have mended your spending ways, you finally get your new card A host of financial burdens seem to melt away You no longer have to worry about your car breaking down or where to get gas money - you can always borrow the money and pay it back later

Your way out of emergencies, your life boat, has arrived And it looks great with the puppies playing on it

Once you diligently read the terms, you get right on the phone and activate it This is a great step towards financial responsibility

Now that you have the credit card in hand, ready to go, your mind drifts to what you can buy with it You’ll definitely pay the balance in full each month, so a few little purchases won’t hurt And isn’t it better to use it and pay it off than to let it gather dust in your wallet? A few small, inexpensive items, and then only for emergencies

A few small purchases add up, and when you get your first bill, you are astounded by the accumulation You can’t pay the entire balance, even though it’s payday

So you change your plan You’ll pay the minimum balance this month, and really start using the card only for emergencies But you continue spending The next month, you can’t pay more than the minimum once again

It is easy to spend, but not so easy to pay Soon, your card has neared or reached its limit The solution? Another credit card, of course You start using that one, maybe with the same good intentions of using it for emergencies only Soon, you are making minimum payments on two cards, and your debt is getting out of control

Maybe one more card? That way you can pay off the other two and make payments on one But that spirals out of control, and you are making minimum payments on not one, not two, but three cards And, to make it worse, your great introductory rate has expired It has shot up to twenty percent Don’t even think about getting a late charge Your “few small purchases” have turned into thousands of dollars in debt, and it’s growing each day

You go on paying your minimum payments, ignoring the damage to your credit score You’ll pay it off eventually, right?

With tax refunds and bonuses, you’ll have the credit card paid off in no time All it will take is a little effort But the bonuses and tax refunds pay your rent, your mortgage, your utilities The credit cards don’t have priority

Soon, you have financial obligations that are pressing on you: how will you pay your heating bill in the winter? How will you pay for the increase in gas and commuting costs? What happens now if your car needs repairs? All that, and creditors calling and sending overdue notices You cannot pay your debt You no longer have control of your financial situation, and this affects every aspect of your life

Start boldly and decisively to take back control Take your three credit cards and cut them up Be merciless If you work hard to pay them down, you don’t want the temptation to start using them again Once you’ve paid them off, you want them out of your life

But what about emergencies, you think I need to have a credit card If you absolutely feel you need a card, choose one Pick the one with the best terms and work on paying it off No more minimum payments Even ten percent more over the top of a minimum payment can help you pay it off faster And this time, emergencies only Buying dinner out for friends is not an emergency A great shoe sale is not an emergency Paying for your car repairs when you break down on the side of the road or buying a new water heater are

Your next step - and you’re not going to like it - is to talk to your creditors Their goal is to recoup their money: if you cannot pay the entire amount, they would rather get something than nothing Most will be willing to work out a repayment plan that you can afford

Figure out what you can realistically pay each month The key is honesty Don’t name a figure that is too much; you will end up in a worse position, and the creditors will not be as willing to work with you again

You also need to be honest with yourself The truth is that the credit card company isn’t the bad guy You borrowed the money, knowing that you were under obligation to pay it back It is time to live up to your end of the deal

It may seem like you accumulated your debt overnight: paying it off is a much lengthier process Nothing but time and money can pay off debt, and you will need to make an effort in both areas in order to achieve your goal

This can be frustrating as you pay and see no immediate effects But as you continue your efforts, you will see both your debt load decreasing and your credit score increasing In a year, you could significantly decrease the amount you owe, or you could let it continue to grow exponentially The choice is yours

Credit repair requires an immense amount of honesty with yourself and your creditors It can be an uncomfortable position to be in, but if you learn from your debt mistakes, then you can start making real progress towards improving your financial life Get the best information on your credit score, visit the free credit reports website to understand your situation, then get your free credit score and find out where you really stand.

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