Fixing A Broken Budget - Bad Credit Repair

by : Erol Orderland

Every adult in North America has likely experienced financial difficulties, at one time or another. Even Bill Gates, possibly the richest man in the world, may have encountered budget constraints in the beginning of his professional career.

An unexpected car repair, hospital bill, or other major expenditure can put strain on available monetary resources, without resulting in the need to for bad credit repair. Most businesses are more than willing to work with an individual until financial challenges are met.

However, if the credit bureau attains negative information, the struggles associated with bad credit repair are protracted and more complicated than cutting up the credit cards, consolidating bills, setting priorities, adhering to a strict budget, or doing some Spring-cleaning.

Remember the old superstition regarding a broken mirror? The individual who breaks the mirror is supposedly destined for seven years of bad luck. Similarly, if the credit bureau has negative financial information, a person can expect seven years of difficulty making major purchases and qualifying for any loan.

For instance, forget trying to buy a different vehicle on credit. Unless the cash is in hand, a salesman will likely decline an application to purchase a new, or used, vehicle. Bad credit repair will definitely be necessary before making any major purchases. In most, if not all, cases of bad credit, the financial activities in question will remain accessible to creditors for the next seven years.

However, unlike the superstitious fear of bad luck associated with a busted mirror, if a credit agency has an individual's name on file, he/she is positively sure of having limited purchasing power in the future. So, hopefully before a credit bureau gets involved, a person can take the following steps to initiate bad credit repair. If not, the same will still have to be accomplished to make sure a name is erased at the end of seven years.

First, begin by cutting up all credit cards. At the time, plastic money seems like getting something for nothing, at least until the bills start coming in the mail. Get the scissors, or the paper shredder, and eradicate credit cards from troubled financial circumstances. The temptation to purchase on credit, and dig an even deeper financial hole, will be eliminated. Without the power to buy anything on time, bad credit repair begins.

Second, a good source for helping people accomplish bad credit repair is a consumer credit counseling service. Many such resources are free, and available in small and large communities. A quick call to a local agency should lead in the right direction. Why bother? A credit counselor can establish contact with the creditors and often convince them to reduce or eliminate interest or late fees. Also, trained professionals can help in the process of consolidating bills and establishing a workable budget.

Third, consolidating bills is a major step in bad credit repair. A counseling service will determine an individual's income and the amount of debt due each month. Then, the economically strapped individual will pay one lump sum to the credit-counseling agency; and the agency will disperse the funds to the various creditors. Thus, the individual is saved the headache of shuffling bills, or trying to remember what is owed where, and who should be paid when. As a result, the stress level associated with financial woes is greatly reduced, and the debtor can enjoy the finer, free aspects of life.

Fourth, before settling down to the finer points of life, an individual will have to learn to set financial priorities, in order to ensure bad credit repair. For example, on a limited budget, the bills have first dibs on the paycheck. Rent and utilities are a necessity. Pay the "must have" bills first. After the unavoidable expenses are paid, groceries are next on the list.

However, the food bill can be greatly reduced by changing purchasing and eating habits. For example, ice cream is great, but not vital to survival; beans have protein, just like beans, but are much less expensive. Many people can save lots of money simply by learning more economic methods of cooking and eating.

In addition, the family budget can be greatly reduced by foregoing the frivolous items. Consider, the cable bill: television is great for entertainment and information, but people can live without an $80/per month cable bill. Also, invite friends to come over to the house and share a meal, rather than eating out. Friends can still appreciate each other's company, without sacrificing the efforts toward bad credit repair. In other words, discontinue the expenses based upon want. Once good credit is reestablished, the luxury items can be reinstated, as the budget will allow.

Until the budget allows for deviation, stick to a strict budget. Keep a roof overhead; do not default on the utilities; and make sure proper nutrition is maintained. After all of life's necessities are accounted for, only then life's pleasantries can be included, and still continue the process of bad credit repair.

Finally, if extra cash is needed, consider Spring-cleaning. In essence, "one man's junk is another man's treasure". If an item has not be used, or probably seen in 6 months, have a garage sale or take items to a consignment store for used items. Not only will the house be less cluttered, the extra cash may provide for an extra bill or entertainment not normally part of the bad credit repair plan.

With perseverance, self-sacrifice, and a little help from trained individuals, bad credit repair is possible. So, do not let financial woes result in extreme financial stress. Take the necessary steps now, to avoid seven years of financial disaster.