5 tips to escape bad credit


Having a bad credit history not only means your inability to maintain financial discipline, but also prevents you from qualifying for loans in the future. However, you may have personal reasons for not paying your debt on time. If you’ve made mistakes or are facing financial issues that could negatively impact your credit score, there are few ways to help justify yourself. Here are some tips to get you started.

1. Learn your interest rates and pay off the highest rate cards first.

Paying by credit card works in two ways: you can either pay the credit card with the highest rate first or the one with the lowest balance first. The first option is called the debt avalanche method, while the second is the debt snowball method.

If escaping bad debt is your top priority, you might want to pay off the more expensive cards first. The debt avalanche method involves making lump sum payments on that specific card each month. This option is probably less time consuming and saves you money, depending on finance charges.

Once you’ve paid off the cards at the higher rate, switch to the one with the lower interest rate. Maintaining such a model not only proves that you are financially disciplined, but also gives you the peace of mind of knowing that you have eased your financial burden. As long as you check your credit card statements every month, you won’t have a hard time figuring out which ones to pay off first.

2. Double your minimum payment

In a scenario where your minimum payment is $ 500 per month and you choose credit card as your method of payment, you will find that debt is building up. Interest costs also keep rising, which lengthens the debt repayment period. Your situation may worsen if you miss a payment, which will drastically lower your score. This can make it harder to get back on track.

To make sure you pay off your debt on time, consider doubling your minimum payment. If you set up automatic payment on your account, your credit score will improve. So if it’s a minimum of $ 500, make it $ 1,000. This prevents your credit history from getting worse even if you are late in paying.

3. Apply the extra money from your budget to your payment

If you’re struggling to pay off your loans on time, how about combing your budget for change. Look for unused subscriptions and find a way to create leeway. For example, if you spend $ 80 on phone bills per month and find that you barely make any calls, it’s time to cut your budget a bit more. You can readjust it to $ 60 and use the remaining $ 20 to pay off your loan. Over time, you will notice how life can adjust even as you lower the cost of your bills.

4. Divide your payment in half and pay twice

Most credit institutions allow you to repay your loan once or twice a month, depending on your convenience. However, the easiest way to escape bad credit is to make bi-weekly or bi-weekly payments, instead of monthly. The trick is to reduce your payment faster, and in doing so, reduce the amount of interest you are supposed to pay on your debt.

The purpose of bi-monthly payments is to reduce the interest accrued on the loan balance each day. More money goes to principal instead of interest. So, if you pay on the 1st of the month, the payment goes to interest. The payment made on the 15th automatically returns to the principal of the loan. Keep in mind that not all loan services allow bi-monthly payments, but it can be a good idea if yours does.

5. If you can’t make the payment on time, get a small loan to cover it.

An unforeseen event in life can prevent you from paying off your loan on time, which is affecting your credit history. Whether you file for bankruptcy or face a financial crisis, there is no reason not to pay off your loan on time. One way to ensure that you are not behind on your payment is to take advantage of small bad credit loans to cover it. As long as you have a good credit history, you won’t have a hard time getting one loan to pay off another.

While it may seem like a riskier financial decision to make, it’s better than having a bad credit history. Over time, look for ways to increase your income as a sideline. In the long run, you end up paying off both loans and have a good credit history.


Paying off debt when you have financial and personal crises can be intimidating, but limiting yourself doesn’t make it any better. But with these strategies, you can reduce your potential debt while saving enough money for your budget.

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