When times are tough, the stress of stockpiled bills can be overwhelming, especially when you can’t make the minimum payments. Without a proactive stance and some careful planning, the path to bad credit is a short one. If the walls of your world are closing in, follow the steps below until you can pay your bills in full.
Step 1: Can you really pay? A sudden loss of employment or ballooning medical bills are just a couple examples of how debt can become uncontrollable. However, a slight increase in your monthly credit card payment doesn’t have to lead to financial ruin. If you are close to making ends meet, look for ways to cut back instead of neglecting your bills. Is a portion of your income devoted to entertainment or dining out? Consider the benefits of staying in; bad credit isn’t worth an expensive meal or a night at the movies.
Step 2: Ask for help. If you can’t afford this month’s payment on your own, ask a friend or family member to lend a hand. Explain your situation and see what happens; generosity may protect you from bad credit. Note: Keep in mind that this solution is temporary and should only be used if you can repay the loan in a reasonable amount of time. Your friend or relative is taking a risk, so reward their good faith with accountability, and never borrow money you won’t be able to repay within an agreed-upon time period.
Step 3: Talk to your creditor. If Steps 1 and 2 prove fruitless, it’s time to come clean with your creditor. Call customer service and inform them that you cannot pay. Make sure to mention that your situation is temporary (if applicable) and that you intend to make a payment as soon as possible. Many creditors are understanding and will waive late fees or extend your due date. They may also delay reporting your delinquency to the credit bureaus. The key is communication: proactive honesty is better than silence.
Step 4: Get help. If you find yourself without options, seeking help is the next step. Many credit counseling and consumer advocacy firms offer advice on how to continually manage debt. They may also be qualified to help you renegotiate the terms of your loan with a creditor. If you are feeling overwhelmed, expertise may be the best medicine.
Past due accounts are often the main causes of bad credit. Resigning yourself to avoidance and an “out of sight, out of mind” mentality may be tempting, but the consequences will find you eventually. Search the steps above for a solution to your problem, and chances are, you will find one.