How To Fix Bad Credit

It sucks to have bad credit. Not only do you have to deal with higher interest rates, less forgiving terms, and the likelihood of rejection for certain credit requests, but you also have to contend with maximum limits and other restrictions placed on your borrowing ability. If you find yourself in a situation with a less than stellar credit rating, and you want to improve it, there are three easy things that you can do.

#1. By far the most important, don't ever miss any payments. Even if you're in the undesirable position of only being able to make minimum payments, you must be sure to make them. Nothing will lower your credit score like delinquency on debt, and if you're in the habit of missing payments, you'll never get ahead. It's absolutely imperative that you at least tender a monthly payment on all debts outstanding that you have.

#2. You should keep the gap between available credit (i.e. your credit limit) and the amount of credit you use as wide as possible. If you're allowed to borrow up to $5000 and you max your credit cards at $5000, you will not be seen as someone with a handle on your finances. Instead, you should get in the habit of spending less than $1 for every $5 in available credit, because your ability to resist using your total credit limit will make you seem like a better risk in the eyes of creditors.

#3. Keep a handle on the number of credit cards outstanding that you have. It's perfectly okay to have a Visa, Mastercard, and American Express card, but when you start to have a credit card from every department score that you frequent, you start to have problems. Odds are, if you a Uncle Jack's Liquor store card, you have too many. 

This is the most straightforward way to start rebuilding your credit. 

Chase Freedom Visa Card

I'm a big fan of cash. It allows you to create your own default budget--that is, when the money runs out, you stop spending. You don't have to worry about banks following your ever purchase. You're statistically more likely to remember the exact cost of items that you purchase with cash than those you purchase with plastic. And you're also more likely to recognize the relationship between the money you earn while working and the money you spend when you use cash. But if you're going to use a form of credit, I highly recommend that you find a card that offers rewards without an annual fee. And the Chase Freedom Card seems to fit that bill. Of course, that is contingent upon your ability to use your card responsibly without racking up missed payments or high balances. All it takes is one missed payment to nullify the benefits of any credit card. I consider it a form of playing with fire when you don't need to. If you want to read about an in-depth look at the Chase Freedom Visa Card to better properly evaluate the pros and cons of using it, be sure to visit The Suns Financial Diary by clicking here: http://www.thesunsfinancialdiary.com/personal-finance/chase-freedom-visa-card-150-bonus-5-cash-home-improvement/

Thoughts on How To Avoid Debt

You can't get ahead paying 18% interest to creditors. That's just a fact. Even if we pretend that it's 1960 and you invest some money with Warren Buffett's flagship Berkshire Hathaway, you're still not going to get ahead if you have to contend with minimum payments on debts compounding at 18%. Berkshire Hathaway, arguably the best investment you could have made in the past forty to fifty years, has only compounded at about 20%. So if you have high credit card debt, the odds that you'll get ahead are very slim. Without a doubt, the simplest solution is to avoid the debt in the first place. If you don't eat the ice cream, you won't have to lose weight. If you do find yourself in credit card debt, the first thing you have to do is stop increasing the debt, and from there, if you make double the minimum payments, you'll eventually dig yourself out of the hole. If you want to read a good article on avoiding debt in the first place, check out this gem from 'Not Made of Money,' link here: http://notmadeofmoney.com/blog/2011/07/five-ways-to-avoid-debt.html