A good credit rating is something you don’t fully appreciate until it’s gone. Before your credit turned sour, you probably didn’t realize just how instrumental it was to your life. A poor credit history can impact your ability to open bank accounts, secure loans and even find employment; the effects can be devastating.
In spite of bad credit, there are many ways you can still live a great life and work toward your financial goals. Here’s how to make the best of a bad situation and work toward improving your quality of life.
See the Positives
It’s natural to feel down in the dumps about your bad credit – a poor score on your financial record can feel pretty personal, after all. However, you can make the best of your situation by choosing to see the positives. Firstly, a low credit score will stop you accruing even more debt. Plus, paying off your existing loans will also bode well for your credit score in the long run.
It may seem backward, but those who’ve never had to borrow money have no way of proving they are responsible borrowers, so the fact that you owe money puts you in an advantageous situation. Another point to make is that having poor credit forces you to learn better habits and live within your means: two lessons that are vital for responsible money management.
Know Your Options
If your credit score is particularly low, it can often feel like the whole world turns its back on you. Although your options might be limited when your credit is poor, there are ways you can get around those restrictions. If you’re looking to rent a property, for example, you could approach a private landlord rather than going through a real estate agency. Private leasers are less likely to want a credit check, so as long as you can provide glowing references and show that you’re earning, you shouldn’t have a problem renting an apartment.
Buying a house isn’t necessarily off the cards either, if you can find a seller who’s offering owner financing on a property they need to take off the market. Owner financing is a viable option for those who can’t secure a mortgage for whatever reason, and it involves the buyer paying the seller for their equity on an installment basis. You’ll still need money for a down payment, of course, but the amount is usually far less than a mortgage deposit would be. Even if the seller requests a credit report, their interpretation of buyer qualifications is likely to be less stringent and more flexible than one imposed by a conventional lender.
Start to Rebuild
People go through periods of bad credit for various reasons. It can happen to the best of us, but the most important thing to do is to take inventory of your debts and figure out a plan to repay them. Talk to a debt advisor about improving your credit history and spend some time researching credit-building cards with low spending limits. Keep in mind that applying for, and being denied, credit will also affect your score, so don’t be tempted to try it until you’re more confident you’ll be approved.