The challenge of managing bad credit is indeed overwhelming and for some people, this can lead to making the wrong decisions.

Yes, it is possible to get over bad credit, provided that the steps you take are well-planned and correct.

In this article, we’ll talk about some of things one can do to manage bad credit the right way.

The first step in rebuilding bad credit is to personally understand the status of your debts.To do this, one needs to obtain a copy of his credit report.Regardless of what type of debts lead you to bad credit- whether it’s due to unpaid credit card bills, mortgages, car loan or student loan- it’s important that you are clearly aware of your situation.

Your credit report is a record of all your transactions to your creditors. Taking a look at your credit report will not only enable you to plan the next steps in building your credit, it will also ensure that no unauthorized charges are adding to your list of debts. In case you see errors in your credit report, do something to correct it right away by informing your creditors and the major credit bureaus about it.

Your Debt to Income Ratio

Your credit report will also help you calculate your debt to income ratio accurately. List all your unpaid balances and divide the result to your monthly income. Next, multiply the answer to 100 and this will be your debt to income ratio. If your debts amount to more than 40% of your monthly salary, it is a clear sign that you need to make drastic changes in your spending.

Seeing the actual result of your debt to income ration will help you realize the weight of your situation. Now it’s time to do some budgeting on your monthly expenses. Find aspects in your lifestyle where you can make changes in your spending. For instance, you may need to give up some of your subscriptions and use the money in paying off your debts first. Practicing frugality will also make a tremendous difference in your plan to take control over your debts. Remember, every penny you save can amount to hundreds of dollars in a month which you can use to pay off debts.

Managing Debt

Obviously, in order to keep up with your bad credit, you need to put a stop on your spending. If you own credit cards, this isn’t the time to continue charging off your purchases on your cards. Pay attention to how and where you spend your money as well.

If your monthly salary isn’t enough to cover payment to all your creditors, pay off high-interest debts first.If you have an unpaid bill on your mortgage, make sure you attend to this first before anything else because you don’t want to put your property on the line.Even a single miss on your mortgage payment can put your at risk to foreclosure.If you have credit card debts, transfer them to another credit card that offers low interest or zero interest on balance transfers.This way, you can save thousand of dollars on paying for the interest alone.

Allison May is a credit consultant and a writer for Credit Creators. The resource provides consumers with valuable advice and information on credit cards for bad credit,credit cards for good credit and other credit-related issues. Its main objective is to help people build good credit. Copyright © 2008


By Allison May

Allison May is a credit consultant and a writer for Credit Creators. The resource provides consumers with valuable advice and information on Guaranteed Approval credit cards, Unsecured credit cards for Bad Credit and other credit-related issues. The main objective here is to help people build good credit. Add Allison on