Despite excellent current economic times, years of struggling economy has affected all Americans in some form. For the majority of us, we have experienced less income and more debt, adversely affecting our credit scores. Thankfully, there is hope to get back on track with the advent of new programs offered in the finance industry.
1. Go back to the bank. If your credit and/or checking history has been flawed causing you to be denied a checking account, go back to your bank and explore new options. Banks perform a review of “Check Systems” which monitors your checking history. They are now offering fresh starts for those that may have had some bad marks on their history appear, with entry-level checking programs. These programs generally start by offering you a somewhat limited debit card account, designed to be a step level to a regular checking account. This entry level accounts generally include a small fee for the service, and the bank will monitor your account activity to determine eligibility for better programs progressively until you have established yourself. They look to see that you can maintain a minimum balance without any overdraft, before being offered paper checks. With time, the bank that one turned you down for a checking account will have you back to regular fee-free banking. It is important to note that these banking fees are almost always minimal and pale in comparison to the outrageous rates offered by a chain or small business check cashing shops or currency exchange shop that take a bite out of each and every check you cash that in the long run are a quick fix rip off.
2. Do NOT be tempted by payday loans. Only in a dire emergency should one even consider a loan of this type. It is merely trading one financial debt or need for another debt, except at an exorbitant interest amount that can easily equate to double or triple your original loan, especially if you fail to make the payments on time, or do not pay it off before the first payment is due. Even if you pay it off immediately, there is still a substantial minimum interest charged on your original loan that will still make the process a bad move for you.
3. If you need a car, research bad credit auto loans in your area. Car dealerships have adapted more and more to the economic changes that have prohibited many people from financing a car. Purchasing a car with cash is no doubt the favorable option, but an automobile is a major purchase that generally requires assistance from a financial source. Even if you have enough cash to purchase a heavily used auto from a friend or some other source, you are essentially buying someone’s problems in owning a car that will usually nickel and dime you to death in repairs. A dealership has to perform a full inspection of all vehicles they take in for sale and disclose any problems to you up front. A bad credit car loan or no credit car loan will enable you to purchase a newer, more dependable model, and give you a chance to re-establish your credit if you make your payments on time.
4. Find a secured credit card. There are many financial institutions that offer credit cards with a major logo such as Visa, or MasterCard, which will enable you to have an actual cash secured CREDIT line, (not debit). These cards are accepted anywhere as any credit (non-debit) card are accepted. The credit card company you choose will ask for a certain amount down to secure your credit line, and these amounts generally range anywhere from $100.00 dollars up to $1500.00. By making your payment due each month, the credit card company will progressively raise your limit. At a certain point, you will qualify for other non-secured cards at lower interest rates.
5. Pay special attention to any business that you owe that reports to a credit bureau. It is these businesses that report on a monthly basis to the major credit bureaus your payment activity. Late payments are being watched and will immediately deteriorate your score. In contrast, pay your bills on time and you will be rewarded with a higher score the longer you can continue to responsibly and consistently pay your debts. One way financial advisers recommend to pay bills, it to use your banks “auto bill pay’ option. By setting up monthly bills on an automatic withdraw to pay bills at a time of your choosing, it takes a lot of the work and stress out of making timely payments. A bill that is auto-deducted from your account is paid like clockwork and keep you from the temptation of avoiding payment when you have the money in your hand and may choose to delay payment and spend the funds elsewhere.
By Mike C
