Rebuilding your credit after a long-term unemployment can be very hard. Being unemployed for long leaves you with no income. During that period, you may have been using your credit card to meet your basic needs. Your credit score is already suffering. How can you rebuild your credit now after getting employed again?
Rebuilding Your Credit After A Long-Term Unemployment : Know Your Income
To start with, you need to know your income from your new job. A knowledge of your income will tell you about the kind of lifestyle to live. It will also inform you of how fast or slowly you can rebuild your credit.
Rebuilding Your Credit After A Long-Term Unemployment : Draft A Budget
So many people who make wise financial decisions live on their budget. Why not create one for yourself? In your budget, categorize your expenses such as in food, transport, clothing and others. You should also have the category of debt repayment and savings. The budget helps you regulate your spending instead of buying on impulse. Because you added debt repayment to it, you will be able to start paying your debt gradually.
Rebuilding Your Credit After A Long-Term Unemployment : Gather All Your Debt
Get a list of all your debts from credit cards, loan and others. Calculate and sum them all. Take note of current debts and past due debts. For all that are past due, list the amount of the delinquency and the number of months past due or the collection or charge-off status. Decide where you want to start paying off and when.
Stop Using Your Credit Cards
Since you have gotten an employment, you can now use your income to take care of your expenses. Using your credit card now will make you incur more debt and am sure you don’t want that. You must DECIDE not to use your card again to avoid hurting your credit the more.
First Thing To Do
To avoid foreclosure and repossession, start with your mortgage and car loans. Once the creditors have seen that you have started paying again, they will not deal with you. If the foreclosure and repossession have already started, contact your creditors and convince them to share your debt in months for you to pay.
However, if you are not behind on your mortgage or car loan, check your credit cards. Do you have a card that is almost charged off? Why not make payments to avoid collections? If many of your credit cards are in trouble already, save the cards that you can. Do this starting with the one that has the highest balance. You can as well meet a consumer credit counselling agency to help you draft a plan to pay your debt.
Also, if you have been delinquent on your utility payments for many months, your credit may be affected. It is best to opt out of the services you don’t need.
Pay Your Debts
Moreover, it is advisable to pay your balances monthly. Pay as much as you can if you cannot pay in full. Continue until you clear your debt completely.
Erase Negative Information
To do this, pay at the right time monthly. Avoid overspending and any delinquency that can spoil your credit. Open a new account if all your accounts are closed. You need an account to build credit. Secured credit cards can help you to start rebuilding your credit. Be determined to do this because it takes a lot off self-control and discipline to rebuild your credit. The effort is completely worth it since it will give you your freedom from debt and increase your credit score.