If you can turn your finances around so that you are spending less, and making more – and you keep doing this day in and day out, you will be out  of debt in no time flat.

Positive Cash Flow = Credit Freedom

We’ve already determined that if you spend less and make more money, you can get out of debt by using your extra cash or extra money to pay down your debts. Some personal finance experts offer a method called the debt snowball, which means you start at the lowest priced debt first and then when you have paid that off, you put the extra money into the next lowest debt amount, and continue this until you become debt free

Other exerts suggest another method where you tackle the highest interest debt first, and work your way down until you have no more debt to talk about.  If you do the math,  they both end up working to be about the same amount so it really comes down to how you prefer to manage your finances: personally and emotionally or mathematically.

The next step is to spend less. You need to check your budget, and then do it again and see if you can’t find some extra money. A great tip is to track every dollar and every penny even that you spend. This will allow you to see exactly where your money is going. You might find that if you cut out the latte factor that you will have more money to go towards.

Tightening your fiscal belt, is the same as weight loss: you don’t  want to overdo it, only to get discouraged and fall out of habit and back into your nasty old habits. Debt Freedom is a slow process, but most seem to be able to become debt free within 3 years by slowly and carefully spending less and making more money where they can.

You can also see what bills you have. You can start with those first and see if you can get those paid out. You don’t have to pay each debt out at one time. You can contact one bill collector at a time and settle for a price.

When settling, don’t give in. Offer the bill collector, what you can pay, even if it’s $500 on a $2,000 loan. Keep working your way through each bill until all of your bills are paid.

Sometimes some bill collectors won’t want to settle. They will offer you a payment plan. This may not be helpful because it will take forever to pay the debt out and it will stay on your credit as well. Your goal is to clean your credit.

Bill collectors who refuse to settle can be skipped. You are offering them what you can give them, but if the bill collectors refuse, their is nothing that you can do. Sooner or later, the collectors will call you and decide to take the settlement payment.

After all of your bills are paid, check your credit report again. It will cost you to get a second copy, unless you save your original report. Contact each agency, so they will know that those bills have been paid.

The three reporting agencies will investigate and if it proves to be true that the debts have been settled, the debts will be removed. You will have clean credit again.

A secure credit card works just like a regular credit card save for one major difference. Instead of paying after use of your credit card after an agreed time with your creditor, you put up cash collateral with financial institutions that offer this service that is the same amount as how much you wish to be the maxed out point of your credit card. So for example if you wish to have a credit limit of $300, then you can only use that card up to that amount. Should you wish to use it further, you simply top up the amount desired and carry on using it. It may sound like another expense but it is much better and cheaper than an unsecured one because with the latter, you have to pay interest whenever you are paying back and with bad credit comes high interest rates.

Taking mortgage with bad credit is ill advised for the simple reason that you may first not be approved based on your repayment history and if you are, you will pay through the roof in interest rates. What many creditors have advised borrowers is that if you would like to take out a mortgage with bad credit, then you must first pay off any outstanding debts. From there, invest in a couple of secure credit cards and after some time, you will have brought up your credit score, thus making you legible for a good mortgage deal. This may be the best way to curb credit charges and get a mortgage.

Then there comes a time when they may take up a job to earn some extra income, or it becomes a necessity for the student to earn a living. In all these cases, he may have a good job but because of his past his credit ratings are so poor that he can’t get a lender who is ready to finance auto loans for people with bad credit. In such a case what does he do to get an auto loan to buy a car? Here are some tips to get an auto loan even though he has a bad credit score.

The first thing to do is check your credit rating with a few reputed credit appraisal companies to know where you stand. Once you know your credit rating you can go online and check out the different money lenders to find out as to who is offering the best possible option with the lowest interest rate.

You can also talk to a private money lender who may be able to finance for your vehicle, as they may offer a better deal as compared to the auto dealer that finances a car loan.

If you ever want to go back to school you are going to have to find someone that will give you a student loans with bad credit. Be careful how you manage your finances because it will affect you for the rest of your life.

Understanding Your Rights

Under the Fair Credit Reporting Act, you have the legal right to file a dispute on any account that you find questionable.  It is up to you to decide what questionable means.  You may have heard that there is no legal way that you can get accurate information removed from your credit report.  This is true to a point.  There is no legal way that anyone can guarantee that they can remove accurate information from your credit file.  But, you may work the system put in place by the Fair Credit Reporting Act and you may get lucky and get accurate items removed.  How?  The credit bureaus notify your creditors when you file a dispute.  Once this happens, the creditors have just 30 days in which to respond.  If they are backed up and fail to respond then the item must be removed from your credit file.  Now, thanks to computers, this strategy is not as effective as it once was.  But, that doesn’t mean you shouldn’t try it.  Also, you may have heard that it is common for things to reappear at a later date.  That is true.  But, if the credit bureaus add something that was removed by dispute without notifying you, you are entitled to sue them in small claims court for $1,000.

Things to Avoid

Since we are discussing legal credit repair, we should mention a few thing that you want to avoid.  Under FICO 08, the only people who can add you to an account as an authorized user are a parent or spouse.  Paying a stranger to add you to their account is no longer a viable credit repair strategy.

Also, if a company claims that they can get you a new credit file, RUN!  This strategy, called file segregation, is highly illegal.  Worse, you, not the company that you work with, are the one on the hook.  Essentially, they have you file for an EIN under false pretenses.  They then use this to help you create a new credit file.  When you make an application, you are instructed to use the EIN rather than your social security number.  If this is discovered you could go to jail and they could walk free.