Improving Your Credit Rating
Most economic reports are stating that more people are filing foreclosures on their homes than at any other time in our history. The causes are multiple. Many people have bought homes beyond their means using short term low interest rates, and when the balloon payments come due they cannot afford them. It is easy for people to assume that their income is going to increase in a five year period, but the reality is that salaries are not keeping up with the cost of living, and so many unexpected expenses come up for home owners that the ability to save money is quite limited.
When we have a house foreclosed or another financial incident the work begins to restore our credit. Improving credit ratings is not easy, but it is possible. The important thing is to show future creditors that you can make payments on time. This can be done in a number of ways. The important thing is to work at improving credit rating seriously and methodically.
I work with people that have bad credit. My role as a case manager is to help people establish a budget and to stick with it. This is not easy for many people to do. It is tempting to spend money when it comes in rather than saving it. I try to teach people to treat their savings account as if it were a bill. Once we have established the amount that can be saved this amount goes into the savings account just as if you were paying your electric bill or phone bill. Once a small amount is accumulated in the savings account I have the clients approach the bank for a limited amount credit card. We keep the limit very low so the person cannot get into debt. I encourage the person to purchase things they have budgeted for with the credit card and then pay the amount off at the end of the month. This helps to establish a pattern of paying on time and also staying in under the established limit. Most banks know the benefits of improving credit ratings so they gladly help their bank customers by offering low interest credit cards. If the bank does not have a credit card they most likely have a debit card. The use of a debit card in not as effective in improving credit rating, however it does show a pattern of responsible spending.
The most important thing is to work on getting your credit history cleaned up. It is not going to do it by itself, you need to consciously work at it and ask financial institutions to help.
