Newspaper Page Text
NEW YEAR’S 2007
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Poor credit is a financial concern for many people. Though difficult,
there are ways to pay off balances and restore credit standing.
(MS) - Every young person has likely
heard the warnings from parents or
older friends and relatives: beware of
credit cards and accruing significant
debt. While such advice is common, it's
rarely taken, as many young people find
themselves fighting a diffi-
cult uphill battle against
debt.
But young people i
aren't the only ones who I
have traditionally prov- *
en less than
respon- s i b 1 e 1
when it comes to credit. Scores V
of people across the country are 1
buried by debt, many so much so 1
that their monthly payments often
go just toward finance charges or
interest. Restoring bad credit can
seem impossible. Fortunately, it's
not. Difficult? Yes. Impossible?
No.
Where most people find restoring
their credit most difficult is changing
their spending habits. Even if you've
cleared yourself of credit card debt, for
instance, you're likely to tempted to use
the card soon thereafter, despite know
ing full well the difficulty you had in
clearing yourself of that debt in the past.
For those looking to restore their credit
and not make the same mistakes twice,
consider the following tips.
• Develop a budget. This is best and
most easily done by listing all debts you
owe, bills you must pay each month (i.e.,
rent, utilities, etc.), and other monthly
expenses and then comparing those
monthly expenses to monthly earnings.
Seeing the two next to each other can
be frightening. However, it can also be
eye-opening, showing just how much
or how little leeway you truly have for
frivolous spending each month.
Once you've seen what you owe and
what you earn, you can develop a bud
get that fits accordingly. Make sure
the budget is realistic. Spreading your
money too will not only make you mis
erable, but it leaves little wiggle room in
case of emergency.
• Use your savings. If you have sub
stantial savings and substantial debt,
use the former to pay off as much of
the latter as you can. Debts, particularly
credit card debts, often carry high inter
est rates, much higher them the interest
rates your savings will earn sitting in
\ the bank. That means your debt will be
k increasing significantly each day you
■ have it, while your savings will only
■ witness a marginal increase sitting in
* your bank account.
It's best to use your savings to pay off
high-interest loans or debts first and
foremost. For example, say you have
an unsecured bank loan with a balance
of SB,OOO at 11 percent, but a credit card
debt of $3,000 at 30 percent. Though the
bank loan debt is higher, you're
\ bet- ter off paying off
t
m
|L *
double the amount of the cred
it card debt. It's always best to pay off
higher-interest loans or debts first to
avoid accruing more debt.
• Try to re-establish credit. Despite
having bad credit, if there is a past
creditor you've had a good payment
history with, re-establishing that rela
tionship can be a great first step toward
restoring your credit. Such creditors are
often willing to re-establish a relation
ship, figuring you're worth the risk.
Take advantage of that willingness if it's
there, as other creditors you haven't had
a positive relationship with likely won't
be so welcoming.
• Read the fine print. Many people
with bad credit jump at the chance
to open new credit accounts, figuring
it's a great way to re-establish them
selves and restore their credit history.
Unfortunately, that's not always the
case. Companies offering "special offer"
See CREDIT, pg. 7
the credit card
debt first,
as the
a ccru ed
interest
y on the cred
it card debt is
actually higher
(and will con-
tinue to get higher),
r despite the value of the
bank loan being more than
Your New Year X
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740 Main Street • Perry GA 31069
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114 Watson Blvd. • Warner Robins *
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