what you earn. If you are not there now, then nothing that you will
do will help. Even if your debts were magically wiped out, you would
just get back in debt right away.
This is the big reason that I don't like debt consolidation loans.
In many cases, it solves the cash flow problem today, but not the
spending problem. People feel like they are out of debt, so they
go on another spending binge, then end up with the same credit card
debts again, plus now a consolidation loan to pay off. Even worse
is the home equity consolidation. In this case, they end up in debt
again, plus they stand to lose their house if they cannot make the
now much higher monthly payments.
Your only option is to go on a money diet. Quit spending money on
anything that is not a life and death matter. Cancel the cable TV,
health club, and don't buy pre-prepared food or eat out. You were
naughty with your money, now this is your punishment. Put every
penny you can to paying off your debt. Once you are out of debt,
then you can start adding back some of the luxuries that you gave
up, as long as it fits within your income.
As part of your money diet, you may find that you have to reduce.
For example, you may have too much car or house for your income.
In this case, downsize. Rome wasn't built in a day, and neither
should you expect to have several newer cars or bigger homes until
after you have paid off your debts.
Finally, if you go on a money diet, and you figure out that you
cannot pay off your bills within 3 years, then you are bankrupt.
File, get your debts discharged, and start your life over. You
screwed up your first chance, but the law says that you don't have
to mess up your whole life, so take the 2nd chance that we the
people will grant you. And don't screw it up again.
1. Payment History
35% of your score is based on this category.
This is also the most important factor.
2. Amounts owed
30% of your score is based on this category.
3. Length of credit History
15% of score.
4. New Additions to credit
10%
5. Types of Credit
10% Weighs the mix of credit account types, ie store
charge, car loan, credit card.
Tips to raise credit
* Dont open credit cards you dont intend to use just to create available balances
* Pay bills on time!! The longer the length of on time payments, the better the score.
*Avoid credit agencies that charge a fee to remove negative items from your credit score. No company can remove accurate records from your report.
