So you want to be the boss, of your own life and possibly future employees. Entrepreneurship is tough enough, but lots of would-be business-starters are hit with a double-whammy when it comes to funding their dream businesses, because of one thing:bad credit. Bad credit sucks, but luckily, there’s hope!
Good credit is like a good relationship. You work on it for years and it doesn’t happen in one day, or even one year. However, unlike most good relationships, the ways to achieve good credit can be confusing in their technical complexity. When you have a bad credit score, fixing it can take years and be incredibly frustrating. But don’t give up, even if your credit is less than perfect.
Are you a GOAL digger? You just need dedication and a smart approach. Almost no one has flawless credit, so don’t feel ashamed! There are some tried and true steps you can take today to kick-start your credit score. You are investing in yourself; a little work here can save you a lot of trouble in the future.
1) Deal With Debt
Debt drags down your credit score, whether it’s old student loans or unpaid medical bills. Stop feeling guilty about the money you owe, because guilt isn’t productive. Instead, take a deep breath, rev up your willpower, and make a plan. If tackling a pile of scary paperwork is overwhelming, then enlist someone to help you. Support from a friend, family member, or professional can keep you committed to progress.
Here are the steps for addressing debt: 1) Evaluate what you owe. 2) Figure out your budget for daily life. 3) Plan how much you can pay off on a regular basis. 4) Negotiate with your creditors. People can be more forgiving than you might expect! 5) Most crucially, stick to your plan.
2) Be Careful With Cards
Stay on top of your credit cards. Don’t spend more than you can pay back, don’t have a zillion accounts, and don’t open and close a bunch of them quickly. This is not to say that you shouldn’t have a credit card at all. As noted on myFICO, “having credit cards and installment loans (and paying timely payments) will rebuild your credit scores. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.”
Keep this in mind also: According to Bankrate, “One of the major factors in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating.”
3) Pay Bills Promptly
Pay your bills on time! This is hugely important. If you have trouble remembering, use payment reminders or an automatic online bill system.
If you can’t pay because you’re truly out of money, don’t avoid the issue. Instead of dodging phone calls and throwing “URGENT” envelopes in the trash, talk to the person or company you’re dealing with. Picking up the phone is stressful, but the results will be far better in the long run.
4) Be Skeptical; Be Cautious
The reality of life, and especially of finances, is that there are no shortcuts. Change takes time, effort, and strength of character. You will have to do hard work and make sacrifices, because very seldom can you have your cake and eat it too, as they say. Don’t fall for the hucksters who try to convince you that they know a secret no one else has discovered.
As the MintLife blog advises us:
“If someone tells you they can double your money in no time with no risk, tell them you already know how. Then fold your money in half and put it back in your pocket. Risk and reward are correlated.”
5) Maintain Good Habits
Read the fine print. Do plenty of research—it’s a good sign that you’re reading this article! Spend less money than you earn. Start saving now, even if you’ve only just started to pay off debt. Set goals for yourself (“I ain’t sayin’ she a goal digger”). Place higher value on what money can’t buy: family, friends, partners, and experiences. Love and accomplishment are way better than owning the latest shiny thing.