Credit card hardship programs are a credit card debt relief option that has been used by many consumers in different stages of financial hardship. Offered by many major lenders, these programs help consumers by reducing interest rates and setting a constant payment plan in motion. More often than not, those who use financial hardship programs are able to avoid further financial hardship or bankruptcy.
But, what about when the hardship program is complete and the debts are completely paid off? Throughout the course of the program, your credit score may have dropped a few points. Thankfully, the effect on your credit scores should be no where as severe as the effect of programs like credit card debt consolidation or settlement. None the less, I’m sure that once you’ve gotten your debts paid off, you will want to go through the process of credit improvement and put your financial feet back on solid ground. That being said, here are the steps you can take that will help you bounce back…
Step #1: Start A Savings Account – I know, having a savings account won’t necessarily help your credit score. However, savings is one of those things that all financially stable consumers has. Credit scores really shouldn’t be your first priority right now, it’s best to think of your overall financial stability first and your credit scores second. So, open a savings account and create an affordable plan that will allow you to make a deposit with every pay check.
Step #2: Open A Secured Credit Card – Secured credit cards like the one offered by First Progress are a great way to start building new, positive lines of credit. Your credit score is heavily based on revolving lines of credit like credit cards so, starting positive lines of credit as soon as possible is incredibly important.
Step #3: Create A Credit Card Budget – Keeping in mind that you shouldn’t spend more than 50% of your credit limit when using credit cards, think of a credit card spending budget that you can afford to pay off each and every month. Make sure that you are incredibly modest with this spending budget as paying it off monthly is incredibly important.
Step #4: Use Your Card – One big mistake that people make is putting their credit cards in their wallet and forgetting to use them. The key here is creating positive, revolving balances if you never use your credit card, you’ll never create any balances. No balance means that you will never be able to show the lenders that you are able to fulfill positive payment habits.
Step #5: Pay Your Credit Card Off With Every Pay Check – Making sure that you keep your credit card up to date is important but, making aggressive payments multiple times per month will do something great for you! Therefore, every time you get paid, pay off your credit card. Not only will this ensure that you never pay a dime of interest but, it will also help you to improve your credit score faster!
How Long Will All Of This Take?
Because everyone has a very unique financial lifestyle, it would be impossible for me to tell you how long it will take for you to get back onto your feet. However, with an aggressive plan, it generally takes about 6 months to a year to achieve good credit scores again. As far as savings and budgeting, that’s all up to you!
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