Americans were in approximately $14 trillion worth of debt in the third quarter of 2018. If you are like many Americans who are in debt, you may find that you also have a low credit score. Debt and a low credit score can make life very hard. Not only will it be difficult to meet your everyday needs when you’re in debt but if you also have a low credit score, this means higher interest rates on loans and it’s harder to find a good place to live. If you’re tired of living in constant debt then you may need to make a few changes.
Only Take Out Loans When They Are Necessary
There are a variety of loan options that you’ll be able to apply for. However, taking out loans of any sort put you in debt, so you need to make sure that you’ll be able to pay it off in the long run. You also need to ensure that when you do, it’ll benefit you by saving you money or increasing your net worth.
For those with bad credit, payday loans are some of the only types of loans that they are eligible for. These loans can help you meet an emergency need in your home and do not require a specific credit score. These loans can truly help those who are in a bind — if you’re interested here’s where you can learn more. However, if you are not wise in using these loans, you may create more of a debt cycle. It’s best to only take out what you need and to make sure that you can pay it back with the job you have in the required payback period.
Get a Secured Credit Card
If you have bad credit or no credit at all, a secured credit card may be the only way for you to increase your credit score. A secured credit card allows you to make a cash deposit equal to the amount of your credit limit, which is generally between $200-$500. The bank then temporarily keeps the cash deposit until you close the account and then it’s reimbursed to you.
The purpose of this cash deposit is that each month you can only spend the amount of your credit limit/cash deposit on your credit card. If you do not pay your bill on time, the bank will use the money that you paid upfront to cover the cost. This is the only way that banks will trust individuals with previous bad credit.
It’s beneficial for the credit card holder because the banks report to all three credit bureaus just like they would for a normal credit card. This then increases your credit score over time. Once your score increases and the bank can trust you, a secured card can lead to the bank offering you a regular credit card with a higher limit. This is one of the safest and easiest ways to improve your credit.
Go Back to School or Get a Second Job
If you have yet to find a career that can sustain you for the rest of your life, it may be time to pick a career that can. Whether that means finding a trade job or going to school to establish a new career, a better paying job will help you get and stay on the right track. There are plenty of ways to earn passive income while you work. There are also plenty of entry-level jobs that are hiring. All you need to do is start applying for jobs that you think you can do and in time you will find a good fit for you.
Getting out of debt takes time, but if you put the effort in before you know it struggling will be a thing of the past.