Fixing Bad Credit?

United States
April 30, 2008 1:34pm CST
Up until recently my husband and I have been managing our finances very poorly. We are now slowly working on digging ourselves out of debt. Without adding new bills that we currently can't afford, what is the best way to improve our current credit rating? Should we continue to make small payments when we can, or save up the money and pay the bills off with one payment? All advice is appreciated.
3 responses
@sisterjinx (1136)
• United States
30 Apr 08
It kind of depends on what you are working to pay off. If you are paying of credit cards that are still charging over the limit fees every month and finance charges there is no "right" way to do it. Because whether you make the small payments or save up, you are getting hit with fees every month that are only increasing your bill. What we are trying to do is keep paying double the minimum payment every month until the one card is paid off. Then we will use the available credit on that card to pay off 2 other bills and continue paying double the minimum payment. We will continue to work this process until everything has eventually been moved over to this one card and then paid off one or two things at a time. In this way I get this card paid off. I get 2 or more bills at a time paid off and then keep paying this same card. This keeps me with revovling credit which actually helps my credit as long as I keep the payments going. Whatever you do. Fixing Credit is difficult but it's worth the effort and you will have such a great feeling about yourself as you accomplish this goal.
• United States
30 Apr 08
I actually only have 1 credit card debt, and the account is already closed, but it is still recieving fees and interest. My current minimum payment on that is $170, we cannot afford to double that. The majority of my bills are old medical and other things I didn't bother to pay. Most of them are under $500 each, and a couple are over $1000. Problem is, I can't afford to pay much towards debt while keeping up with current, revolving bills such as power and rent. I typically try to put $25 a week towards debt, as well as anything extra that comes in such as if my husband gets a bonus check, a child support payment, or any money I earn through internet endeavors. I know it will take a long time to pay these things off, but I am in the mindset of any little bit is better than nothing at all. Am I right?
• United States
30 Apr 08
You are of the right mindset. You have to do what you can and in time it will pay off. Also, if you do get a large amount to work with, don't just pay stuff off without calling first. Sometimes places will offer you a lower payoff amount. So lets say you have a bill that is $500 and you get a large amount to work with to work on some bills, maybe $600. Call the holder of this debt and ask them what the payoff amount is. Sometimes they will say the whole amount but sometimes they will offer a lower amount. For instance this $500 holder might say if you can send $350 they will call it paid and take it off your credit report. It never hurts to ask. But they won't let you do it on payments, they want it PAID off. Until you have that available to do, you are right to just keep on trucking. Even sending $20 a month to get some of these paid off is going to help you in the long run. Do what you can while you have to and do the big payoffs when you can. You might consider taking half of what you are sending them and save it and only send them half. Then when you get a large amount saved try making some payoffs using the above referenced method. Good luck. It's tough but it can be done if you buckle down. I have written some articles about getting out of debt and learning to save even when you are living on next to nothing. If you are interested, send me a friend request and I'll give you the web addresses.
• United States
30 Apr 08
Thank you. I will add you as a friend. I am also attempting to begin savings accounts. So far I have $10 saved :D Actually, if you read my blog that is linked on my profile, there is a section under money making where I have listed my goals and plans for what to do with the money I earn from the internet. I do know about attempting smaller payoffs, we have done this in the past, just not often enough. We recently, with our tax money, paid off his old student loan debt that had been in default for years. We'd been making $55 per month payments. We are happy to have that off our backs. And they settled for $800 less than we owed them.
@carolscash (9504)
• United States
24 Nov 08
I intend to do this as soon as we get moved into our other house. I think that our utilities will be a lot less and I know that our payments will be lower. I plan to pay a little each month on a bill or two until I get them paid off and then I will start on some others. I think a lot of people are in this same pattern and this discussion will help them to see that they are not alone.
@chaiizky (101)
• Philippines
22 Nov 08
i had fun reading this Discussion. I have been wanting to manage my expenses and credit for so long. i sure learned a lot from this. thank you.