Due to the current global economic climate, many people are finding themselves knee deep in debt with no way for recourse due to their bad credit history. A bad credit history can make life very complicated, with loans being very difficult to secure and even if they do come through it will be with a very high interest rate.
However, all is not lost; there are a few things that you can do to rectify the problem. We shall go through some of the salient steps that you can take that are sure to prevent this problem from reoccurring.
Credit card companies will stop reporting activity on your credit card to the credit bureaus if you do not use the account for a long period of time. The best idea would be to reactivate an old credit card so that you can add more credit history in your name. The longer your credit history is, the better it will be for your overall record, and hence it will help solve your problem to a certain extent.
You need to be regular with your payments in order to have a good credit history. Consistency is a good practice to follow. Try talking to your credit card company and ask them to settle for a certain minimum payment which will help settle the entire debt that you have. If you have a huge debt and are on the verge of defaulting, this is the best step that you can take. Most credit card companies would be willing to settle for a certain amount if it will avoid them the trouble of having to send loan retrieval agents to your home. It is better to be proactive in the first place, never get into debt with the credit card company; try to pay off all your debts by the time the grace period ends.
Rechecking your credit report from time to time is very important. You need to check if there are any erroneous reports or entries. Also if you have done something wrong, such as not paying a bill or defaulting on a payment, this needs to be corrected before you apply for a loan. The credit score or the FICO score, is something that is very important for your financial moves. Hence you need to keep a tab on it.
If you have an outstanding balance very close to your credit limit, it will affect your credit rating adversely. So you need to take steps like getting a debt consolidation loan to pay off your debts.