Fundamentals to Clean Up Credit Report
I know people want an instant solution to magically clean up credit report. The truth of the matter is, how many times have you consolidated your credit card debts only to be back where you started or owe more than before? Yes, you can reduce credit card debt immediately by taking action today. However, the issue goes deeper in that it’s about educating yourself financially and also curbing spending habits.
Often, I hear how people vehemently deny that they are spend thrifts and all their money go to necessities. I think they have to evaluate their necessities then. The truth is, we live in a very blessed country filled with opportunity. Why is it that I see some families “get it” and avoid bad credit like the plague while other families are completely oblivious?
A case in point: when college kids go off to school they are bombarded by credit card applications. In theory, I have no problem with this. You do need to establish a credit report for the future. However, kids with a basic financial foundation know this is not an all access credit card to party. They should have basic money management fundamentals to know how to pay credit card fees on time to avoid having to repair credit debt in the future. After all, in all likelihood, they will have to pay for their student loans and you don’t want bad consumer credit debt to be piled on as well.
And then right after college with new degrees, the new graduates are filled with hope of making fortunes with their piece of paper. Here’s a news flash. Education does not guarantee a high paying job. But, the story continues in that they move back home in search of a job. They continue to wait and wait while living off credit cards never thinking that one day that they will need to repair credit debt. The good news is that the dream job comes. The young adult takes an apartment as a sign of independence. He even gets a new car to commute to work. Things go good for awhile and he lives it up with furnishings for the apartment and a brand new plasma tv. You know where this story is going… Disaster strikes and layoffs happen to the company. He’s out of a job and he has no emergency fund saved but he’s got bills to pay and he starts using his credit cards to get out of jams. After all, he’s using his credit cards for necessities. Before he knows it, he’s got bad credit debt that he needs to repair.
The scenario just described is not uncommon. Often times, things are rolling along merrily and then “life” happens. The problem is that once it starts, bad consumer credit can become a nightmare that you can’t get out of. That is why a solid nest egg must be established early on in an emergency fund. These situations must be nipped in the bud before your financial file gets damaged and you need to clean up credit report.
Tags: clean up credit report, credit reports, emergency fund, student credit cards