6 Ways to Help Clear your Bad Credit Record

6 ways to improve your bad credit
6 Ways to Help Clear your Bad Credit Record

Living in a world where things just becomes more expensive every day, sometimes makes it a challenge to keep all of your finances in place.

What is bad credit?

Let’s face it, we all love to shop, and opening up accounts to buy things, just makes life much easier. But, what if you can’t pay all your debt at the end of a month? Well, that is when you get a bad credit record.

An easy description of bad credit would be if you fail more than once to keep up with all your credit payments, which could result in you being unable to get approved for any new credit.

So the big question is: Is there ways that you could get out of debt, and finally be debt-free?
The answer is YES.

So keep reading and find out what you can do to clear a bad credit record.

  • Are you struggling to keep track of all your debt?
  • Do you dread the end of the month because of all the bills you have to pay? Or are you simply unable to meet the minimum required monthly payments?

If you have answered yes to one or even all of the above questions, then it is time that you might want to consider a debt consolidation loan.

So what exactly is debt consolidation?

Debt consolidation is the process where you take all of your debt and you combine them into one big single loan. This means that you will have one loan that pays off your other loans.

There are 3 main types of debt consolidation loans that you can choose from.

1. Secured Loans

This is a loan where you use an asset as collateral to secure the loan. The asset is usually your home or vehicle.

2. Unsecured Loans

This is sometimes the safer option since you don’t use a very important asset as collateral. Unsecured loans can be in the form of personal loans, student loans etc…

Of course, there are both advantages and disadvantages to both types of loans.

Secured vs Unsecured Loans

Secured

  • Lower interest rate
  • Smaller monthly payment
  • BUT, the risk of losing your asset

Unsecured

  • Higher interest rate
  • Don’t risk an asset
  • BUT, shorter payment terms

3. Credit Card Transfers

This is usually when you transfer all of your credit card balances onto one single credit card.

Just remember that you need a credit card that has a high enough credit limit, in order to hold all of the debt. The downside to this type of consolidation is that it might have a negative impact on your credit score.

Debt consolidation is not for everyone

Most people who consider this option might already be in a bad financial situation. If you are under the impression that debt consolidation will help you get rid of your debt, you may have the wrong idea.

It is mainly a short-term fix – your debt is still there, so you can basically say you’ve just moved it. Make sure that you carefully consider all the aspects of debt consolidation.

There might even be a much easier solution to your financial problems.

Cash loans are usually unsecured, which of course means that the loan is not secured against an asset, like for example your car or home.

There are, of course, different types of quick loans available, but the most common types are short-term and long-term cash loans.

Each loan provider also has their own terms and conditions which is applicable when lending you the money – eg. when the repayment amount is every month, the interest rate they ask, the time period you have to repay the loan etc.

I have bad credit, can I still apply?

If you have a bad credit record, you will mostly have your loan applications rejected. The good news is that there ARE licensed lenders that specifically tailor loans for blacklisted people. They are called blacklisted loans – these loans will get you back up on your feet, and help you to become debt-free.

There are a few reasons why people apply for a loan, the most common one being if you want to purchase something really big, like buying a car or even a house.

If you are studying, you might even consider getting a student loan to help you get through school/college.

Another loan that many people make use of is a payday loan. A payday loan can be seen as a small short-term loan and are often referred to as a cash advance.

Advantages vs Disadvantages of cash loans

Advantages

  • It is easy and fast to apply for loans, even if you have bad credit.
  • Loans help you to afford an expensive purchase.
  • If you have a business or want to start one up, you can get the funding you need through a loan.
  • A great advantage with payday loans is that you will have the money the same day as you apply.

Disadvantages

  • Some cash loans can have very high-interest rates.
  • Payday loans are short-term.
  • If you miss payments, it could reflect negatively on your credit score.

When you are having financial difficulties, loans can be very helpful.

Just remember that a loan is still a form of debt. It can even be seen by some as a commitment, so you should be 100% sure if you are considering getting a cash loan.

A cash loan is when a bank or credit organization lends you money over a period of time.

But what happens when you are in a situation where you need money, and you need it now? For example, your car breaks down and you need to fix it because you don’t have a second car, or you might need to desperately pay some unforeseen medical bills, or just get a cash loan to help you get out of debt.

Well, things just got easier, now you can apply for a loan online.

Just think about it, all you need to do is go online, pick the organization that fits your needs, apply and receive your money.

Fast, Easy and Simple

No more waiting in line at the bank, you don’t have to explain why you need money, and there aren’t dozens of paperwork.

One of the best things about an online cash loan is that you will get an answer (whether your application was successful or not), within a few hours if not minutes, and money in your pocket the very same day. The only concern you might have is when you know that you have a bad credit record, BUT rest assured even with bad credit you can still apply for an online loan and get approval.

The most important thing to remember when you are thinking of applying for a loan is to choose the right place. Do not be tempted by ads offering you loans.

Xcelsior is also a very good and reliable choice

You can choose how much money you want and how long you need it for. You will almost instantly receive an answer. There might be people who don’t feel comfortable enough to make use of cash loan services and this might just be because these organizations are not granted under the name of a bank.

But don’t let that scare you away.

Online cash loans are the perfect solution for people that need cash quickly and without hassles.

And the best part is that you can do it from the comfort of your home or office.

What is debt settlement & how does it work?

It is a process in which the debtor and the creditor come to an agreement on a reduced balance/amount that will be regarded as payment in full. You will have an opportunity to clear your debt much quicker than you would have if you were paying it off. One of the most successful companies known for debt settlement is DebtBusters.

When it comes to the point where you want to get rid of all your debt, the question you should ask is:

Is debt settlement the option for you?

On the surface debt settlement sounds like an easy process – you pay the debt settlement company and they then pay your creditors. In the end, everyone gets paid. It can be seen as an alternative to bankruptcy, so the big thing to remember is to look at all your options before deciding on debt settlement.

Like for example, if you are in a situation where you are maybe one or two months behind with payments, you can always first look at a debt management plan as an option, instead of directly turning to debt settlement.

There is of course one big advantage to debt settlement:

  • You will have a much lower, single monthly payment, one which you will be able to afford.
  • And since you will have fewer creditors to pay every month, you will now have money available to make payments with and to start creating a budget – to avoid debt in the future.

But before you get too excited, there are a few disadvantages also:

  • Debt consolidation companies can often charge high and expensive fees.
  • Making use of debt settlement can have a negative impact on your credit score.
  • You could owe taxes on the settled debt.

Now that you know some of the advantages and disadvantages, it is also important to keep the following things in mind when you are considering debt settlement:

  • Always ask questions.
  • Make sure you read and understand the fine print in the documents before you sign anything.
  • Try to avoid settlement companies that contact you first – it should be the other way around.

Keep all these things in mind when you are considering debt settlement and make sure that you consider all other options.

Two types of credit counselling agencies

They are Non-profit and For-profit (those that include high fees).

Credit counselling can be a very positive experience, but then you must be 100% committed to the process, and also be upfront and forthcoming about your financial situation.

Remember a credit counsellor will only be able to help you if you are honest and if you are willing to get the necessary help to get out of debt. It may sound strange to some, but it always helps if you have a trustworthy counsellor on your side helping you.

You might think that credit counselling is not for you, or you might be wondering when would be the right time to seek help from a credit counselling company.

Below are a few signs that will help you decide, and if you recognize some or all of these, then considering credit counselling might be a good idea.

1. If you can’t pay for living expenses

If you are struggling every month to pay bills, buy food and have money left for utilities, then you might want to get some advice on budgeting.

2. You don’t know exactly just how much debt you really owe.

Payoff amounts and interest on accounts can be confusing. Are you just paying the minimum payments every month to make sure the creditors stay away from you?

If this sounds like you, you need to get help. A counsellor can help you figure out exactly how much you owe.

3. Are you paying credit card bills with other credit cards?

This might sound familiar to many of us, but you have to remember, by doing this you are only getting yourself further into debt. Talking to a credit counsellor in this situation might be a good idea.

Just keep in mind, credit counselling is a good option, but there is one disadvantage – it will go on your credit report. Although it doesn’t affect your credit score, it might make things difficult in the future if you want to get a loan.

So setting up your very own budget plan or talking to a trusted friend, family member or mentor can be an alternative to seeking credit counselling.

You just have to follow the right steps, whether you are using debt consolidation, cash loans, credit counselling or other ways.

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