| How Bad Credit Auto Loans Can Help Credit Repair |
Nov 14th, 2012 |
The first thing that you should consider doing, if you haven't already
started it, is to create a budget for yourself. Consumer credit repair
(bad credit auto loans are also a form of credit repair), in its
simplest form, is all about setting up a budget and sticking to it.
This involves looking at your income and controlling how much you
spend. Once you have calculated how much of your paycheck needs to go
towards basic expenses (food, utilities, rent/house payment) the balance
can be set aside for the next step in the process.
The
second step is to prioritize the balance of your debt. You should first
determine the line of credit with the highest interest rate. If you have
any additional funds, try and make more than the minimum payment on at
least this one account. Pay the minimum due on all the others until this
account is paid off. Once the account with the highest interest rate is
paid off, look for the account with the next-highest rate. Repeat the
procedure until all lines are paid off, including the loan you received
through bad credit auto financing.
Finally, keep some money in
reserve, but concentrate on paying off your debts. It always makes sense
to have an emergency cash fund, but don't put any more money in it than
necessary. Savings accounts pay notoriously low interest rates. Keeping
your cash in one that pays 5% while your credit card interest is
costing you 17% is a losing proposition all the way around. It's better
to use any extra cash you have to pay off high-interest debts, such as a bad credit auto loan
Always keep this in mind: reestablishing your credit requires a
two-pronged attack. Decreasing your debt while establishing a positive
payment history with an auto loan using bad credit auto financing can
help raise your credit score and put you back on the road to better
credit.
|
| |
|
