How can I get my credit score back on track?

2021-07-18T17:40:12-04:00

Hi! Not sure if this is the type of question I can ask on this forum. If not please disregard and accept my apologies. So here it goes...

I have a collection on my credit report that is really hurting my score. Does anyone know of any legitimate Companies or Programs that help with fixing this by way of debt consolidation loans, secured or unsecured loans? The debt IS mine and I am looking for help to either get a loan to pay it off or do a debt consolidation so I can free up funds to start paying on it. Any help and/or recommendations is greatly appreciated.

Response by CSM Charles Hayden made Jul 18 at 2021 5:45 PM

2021-07-18T17:45:40-04:00

everydollar.com+dave+ramsey&t=ipad&ia=web

Dave Ramsey counsels many people on their personal finances on his radio show. There are also podcasts available via his website.

Response by SFC Casey O'Mally made Jul 18 at 2021 6:25 PM

2021-07-18T18:25:16-04:00

The very first thing you have to do is make a REAL BUDGET. Not a "dream budget" that underestimates actual expenditures or overestimates income. REAL. Really real. Like save EVERY SINGLE RECEIPT for a month, even that 25 cent pack of gum.

Once you do that, then look at your budget and your receipts and find out what you can cut out, and what you can reasonably afford to put towards debt.

Only then should you go in to look at debt consolidation, etc. You will only hurt your credit worse if you take out too much money and cannot pay it back.

Response by SPC Johnny Campbell II made Jul 18 at 2021 9:55 PM

2021-07-18T21:55:40-04:00

I agree with SFC O’Mally, create a budget first. The way I did my family’s was using an excel spreadsheet (nothing fancy lol). I wrote down all you fixed expenses that you have to pay (electric, water, car payment, rent/mortgage, etc). Then in a separate boxes I outlined all my gas expenses, grocery expenses, eating out, and miscellaneous (household things like toilet paper and paper goods). I did this for the last three months using my bank statements. This allowed me to see where my spending was going. I did an average on the last categories since it was variable expenses. I added the averages to my fixed monthly expenses to see my total monthly expenses. I deducted that from my take home pay for the month to see what I have left over on paper. At this point look at the different areas (subscription services, auto insurance, eating out, etc) to see if you can decrease that expense (those three areas are the easiest to find a way to cut down the cost).

After your budget, start looking at your credit (I recommend using credit Karma because it will show you your approval odds for different lending products). When looking to consolidate debt there’s three variables to take into consideration (monthly payment, interest rate, and duration). If you’re looking to get a specific monthly payment amount, you may have to sacrifice on duration and/or interest rate to get it within your budget. The longer in duration, the more typically in interest.

If you have a collection on your credit, it may be hard to get a consolidation loan. My recommendation if that is the case, see if you can decrease any other debt payments like credit cards to the minimum payment then take that difference and put it towards the collection to knock it down quicker. This is a method some people use in paying off multiple debts, called the snowball method. Start with either the highest balance debt or highest interest and pay minimum payments on everything else (example: 4 credit cards, you have been paying $100 on each. Cut 3 down to the minimum $25 and apply the difference to the 4th credit card. So instead of paying $100 on it, you’re paying $325. Once you pay that one off, apply that payment to the next card and so on).

I’ll stop here as it might be on the brink of information overload but I’m happy to give anymore tips