Last time, we discussed the immediate steps you should take when recovering from a foreclosure experience, including the creation of a budget and keeping up with bills and debt maintenance. Once you've accomplished that and your monthly financial life is stable, the next level is to make a plan to get out of debt entirely.
Make a Plan
A high debt load will continue to keep your credit score low, especially as you emerge from a foreclosure, even if you are "treading water" and current on your bills. Reducing your credit card debts to 30% or less of the credit limit should be your primary goal. This will also improve you "debt-to-income" ratio, another factor considered by lenders when considering a loan package in the future.
Here's a quick guide to getting out of debt:
1. Know your total debt.
2. Prioritize your debts - you can either pay off high-interest debts first, as they're the most expensive or the smallest debts first, to get some quick boosts.
3. Know your capabilities - making a plan that has you paying more than you can afford isn't a plan at all - it's a mistake.
Repairing credit is definitely not a one-man job. In addition to making sure your family follows your plan, you can also seek expert advice. You will understand and manage your debt better if you consult from credit counseling services. There are signs that it might be time to look for a counseling service. One of them is when you've tried coming up with a debt reduction plan on your own and failed. The most reputable companies and agencies in the industry are usually members of the AICCCA, a member-supported national association representing non-profit credit counseling companies that provide consumer credit counseling, debt management, and financial education services.
Here are a few things to keep in mind when looking for a counselor:
• They should be willing to offer a free initial consultation where you can ask them about their methods. Then you can judge whether it's something you could do on your own.
• Ask about fees. All credit counselors will charge for their services - know up front what you're committing to.
• Ask in detail about how creditors get paid. Most counselors have you make lump payments to them and then they pay down debts after negotiating with creditors. This should be very transparent to you.
Finally, A Credit Card
If you don't already have one, you should get a credit card once you have a budget and a plan to eliminate debt. When you acquire a credit card, use it only for purchases you can pay off immediately. You will be right back into debt trouble if you splurge on spending. Using a credit card wisely will demonstrate responsibility and raise your credit score.
New You Credit Repair offers a variety of uniquely effective solutions to common financial problems. Once we review your financial situation, issues and goals, we will tell you which services we recommend for your specific situation, and where you should start. Call 866-403-0248 or go to http://www.newyoucreditrepair.com for more information.