The practice of borrowing money is quite prevalent in the times we live in. From an 18-year-old university aspirant to a 70-year-old retired lawyer, each one of us has acquired a loan at some point. If by getting a loan from any of the umpteen sources available, the borrower can ease his life just a tad bit more, then what is the harm in acquiring debt?
Even though we desire that the borrowed amount will only bring good fortunes, it is not always what happens. People get a loan for more comfort in their life, but the opposite can also occur. Many attributing factors diligently work to make your life even more difficult than before you took a loan.
Imagine you bought a home for your family and the house was burnt because your 4-year-old boy forgets to light off the candle. You saved yourself and your family, but now you don't have a place to live and a debt that you have no clue how to repay.
Tragedy can strike anytime and to anybody, and the sad part is you can't do anything to avoid it. In the UK, I'll tell an interesting fact that the entire population had a total debt of about 1.28 trillion pounds by the end of the 2021 fiscal year. Out of these, almost a third of the borrower has had to jump instalments and have a bad credit score because of it.
Bad Credit and Good Solution
What does one have to do shed off the tag of bad credit? Is it easy to do so? Or the perpetuity of debt will only end with the borrower's life?
Rest assured, my friend, no matter how daunting your debt may be, regardless of you having a terrible credit score, there are a few ways through which you can change your circumstances for the better.
Analyse Your Current Financial Situation
The foremost thing you need to evaluate when trying to combat bad credit is to know the exact figure you have to repay. Being aware of your debt will help you gain a perspective and give you a push to start planning your way out.
Think of it as an exam. If you do not know what your syllabus is, can you even try to study? Knowing what to learn and how much will help you make your study plan and eventually get a high grade on the final test.
Turn efforts for better budgeting
Most people relate budgeting to being thrifty. It is neither entirely correct nor completely wrong. This concept means that you need to evaluate your expenses and income. After that, set a sort of road map for prudent spending and saving.
Unnecessary spending will never let you pay off your debt ultimately, nor will it allow you to save for your future. There is an ideology followed amongst the financial Wisemen. By the age of 30, you must have saved about a year's salary; and by 35, your savings should be equal to your two year's salary.
If you find yourself at this place, consider yourself a pro at budgeting.
Bet on the External Lending Support
Getting a new short-term loan is an excellent option for improving your credit score. Your credit score is entirely dependent on your timely repayments. If you have had to jump the repayments, your score won't be impressive. Since you would inevitably have to borrow in the future, you will need a fair rating to become an eligible borrower. You can recover your credit record after acquiring bad credit loans. Just don't jump instalments this time.
However, only do this when all your previous debt is cleared off.
What about merging all debts?
Many of us overwhelmed with debt have lost track of the number of instalments being paid by them each month. For this lot, debt consolidation can become the rescuer.
According to this concept, a borrower with too many loan obligations can acquire one loan that would pay off the rest. Then, he would only have to make one instalment each month. By consolidating the debt, you get relief from the nagging of creditors, and you can save some money because you will be paying only one interest rate.
Requesting money from your near and dear ones
The support of your loved ones can act as a motivator to waive off debt and become free of it.
Apart from your close circle, seeking a financial advisor can also be very fruitful. He will not only provide you with exceptional solutions for combating debt, but he may also help you in raising your income through prudent investments.
In the end, I would want you to know that the sun always seems to shine brighter after a dark storm. Likewise, your debt situation may look out of hand today, but the dark financial clouds will disappear, and your bank balance will shine blindingly one day.