It is a task that often seems impossible to begin, let alone maintain.
Unfortunately, it is an unavoidable crucial piece of the financial stability puzzle. We are known and judged by it. Our opportunity and options are limited by it. In short, it matters. A whole lot. However, it is impossible to buy outright or obtain quickly. It’s illusive. It’s complicated.
IT is… drum roll please…Credit.
If you just sighed or huffed, don’t feel badly. You are among the great (and growing) majority of Americans today. And I’ll tell you the primary reason for that. Establishing credit is much like investing in commerce or real estate. Essentially, it is very difficult and time consuming to IMPROVE it if you do not already HAVE it.
In the past decade, the average debt in America has risen approximately 11%. That is not a national debt statistic. It is a personal statistic. Meaning that the average person or family in America now is significantly further in debt than our parents or grandparents ever were. This is largely due to the increase in housing and medical costs. If we dig a bit deeper, we find that unpaid student loans are a huge part of that statistic.
Unlike homes, vehicles, and other physical assets, an education cannot be repossessed. This debt, however, must be recovered somehow. If there is no asset to reclaim, the alternative is (and will always be) national or federal absorbtion.
The result? Higher interest rates and taxes. Ultimately, that translates to an increasingly higher cost of living. And a higher cost of living translates to more debt. At this point, you should have a clear understanding of how we have found ourselves perpetuating this vicious cycle.
Now, the question is – how do we break it?
The following are my educated and experienced (though not professional) ideas on the subject.
1.) First and foremost, take a solid inventory of personal debt.
This includes anything that diminishes your overall credit score. This process is never particularly fun and can be overwhelming. I strongly recommend taking it one step at a time once all of the information is at hand.
In my personal experience (and I must admit that it is fairly extensive), almost ALL creditors will take what you have to offer. Often 50% or less of the full debt amount. They don’t want to deal with you any more than you want to deal with them. Always, always negotiate your debt. Just because they didn’t volunteer a settlement does not mean they aren’t willing to accept one.
2.) Whenever possible, lean on any positive references.
This can be a landlord, a self-financed purchase provider (buy-here-pay-here vehicle purchase, furniture from a local store paid for in installments, etc) or even a utility company that you have maintained good standing with. Many of these, if encouraged, can report positively to credit bureaus on your behalf.
3.) Don’t be afraid to ask questions!
Any information obtained can help you prioritize debt and make decisions that benefit your credit the most. If you are considering applying for any new line of credit, clarify what the possible penalties are for ‘pinging’ your credit report.
If adding a cosigner to a new or existing line of credit is an option for you, ask your creditors to reevaluate their terms! ALWAYS ask. There is no shame in it, and you may be surprised how often it pays off.
There is nothing easy about credit – whether establishing or recovering. I would simply encourage you not to allow yourself to get overwhelmed and give up entirely. So long as you are trying, you are making a difference that will pay off exponentially in the long run. Just remember…ONE STEP AT A TIME!! It is SO very worth it!
Image Credit: Pixabay
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