Even the government recognizes that a single mother is the one most likely to be living in abject poverty and experiencing debt problems. The general public takes a very dim view of people with bad credit. Most assume it was due to mismanagement and irresponsibility. Although this may be true in some cases it is not true for all. Just recently people who had A-1 credit have seen their scores slip nearly off the grid due to extenuating circumstances. These same circumstances hit single mothers as well. loss of employment due to downsizing or company closures is one contributing factor. If you do not have an income how then are you to pay your rent/mortgage, car notes, and insurance or even buy groceries. Sure you are eligible for government subsidies like Aid to Families with Dependent Children and food stamps but these cover very little. Going from budgeting a weekly or biweekly income to budgeting a much smaller income for an entire month can be one of the most challenging undertakings you could ever experience. You shake your head and wonder if there is anything that can be done as you watch the debts continue to rise like a swell in the ocean. This article is for those who are currently feeling as if they are going down for third time in an ocean of debt. There is help for you and all it will take is a willingness to relearn all that you think you know about household management.
How to Check Your Credit History
First things first, if you need “credit help” you are going to need to take a look at your credit report — ALL your problems likely stem from your credit score. If your credit score is low, you won’t be able to qualify for any sort of credit — be that credit in the form of credit cards, personal loans, lines of credit or even something as innoculous as gettting a new cell phone on a plan. Your credit history could even effect your ability to open new bank accounts and such.
How do you check your credit score if you don’t already know? Well you have two options to check your credit. You can check your credit online for free which is by far the most convenient (and pretty much instant) with one of the major credit agencies (see the link for a trused, non-scam one) or you can do it the old fashion way and actually mail all 3 credit unions a written letter request (snail mail folks, NOT email) for your credit history. By the fair credit act, all three agencies must send you your free credit report once a year when they receive the written request. The agencies are Equifax.com,experian.com, and transunion.com.
It is recommended that you get all three credit reports and compare the information in them.
Avoid “So Called” Credit Repair Agencies
Avoid these credit reapair agencies you find online or in the phonebook. At best, they will only tell you information you can get for free (like on this Single Mother Credit Repair page you are reading). These “repair credit agencies” really do not have a great track record for achieving results. In fact, the Federal Trade Commission does not consider them to be legitimate sources of credit repair help. They are mostly scam artist that can make a bad situation get even worse for you.
Communicate With Your Creditors
There cannot be enough said about communication in this situation. The worst thing you can do is ignoring your creditors. Talking with them can lead to solutions you may have overlooked or no knowledge of entirely. There are ten major mistakes often made when people find themselves in over their head with creditor especially with credit card debt. The first wrong thing is to not attempt to repair it at all. Seven years is a very long time, which is how long it takes for most bad credit info to fall off your credit report. If you have applied for anything at all and been turned down because of your bad credit you can get a free credit report from all three of the credit reporting agencies. They can be reached by phone, online or by USPS. The second thing a person can do that at first seems a good idea is to dispute everything on the credit report. The agencies will get the feeling that your disputes are indeed frivolous and stop responding. And you must also know that not everything on the report is bad, there are things on there that are helpful to you that is why understanding what is on your credit report is so important.
Should You Declare Bankrupty or Cancel your Credit Cards?
If you were considering just canceling your cards that too would be a mistake. It is best to continue to pay on them and just stop using them. Closing the credit card with a balance owing will do absolutely nothing to improve your score, it will have the opposite effect. Transferring a balance is truly a last resort. When you transfer the balance from one card to another you are increasing the debt owed and eventually that will have to be paid. If you are considering this you should take advantage of the Balance Transfer calculator to see just how good or bad the decision can impact you. Visit the following site www.smartbalancetransfers.com/balance-transfer-calculator to find out whether it provides savings, as you would hope or actually another expense. Do not destroy your credit cards as you are taking steps to repair your credit making small purchases along the way can actually help repair the damage. Do not play payment roulette, paying some cards and letting others go unpaid. If a choice on which ones to pay has to be made pay on the currently active cards that are not already in collections. When contacting a credit reporting agency or any correspondences with a creditor use certified mail this gives you indisputable proof that you sent it when you say you did. It will also show when it was received by the agency since it has to be signed for at delivery.
Although Bankruptcy is an option it too should be viewed as a last resort. Bankruptcy remains on your credit report for seven years. Even once it falls off your report you will be asked about it so it could still impact your ability to get loans in the future.
Negotiate With Creditors
The best way to begin to repair your credit is to first understand what credit is and the role it plays in the scheme of your life. Know what types of things can impact your score. Take steps to lower payments through negotiation with bill collectors and loan companies. Credit card companies are willing to negotiate, as it is cheaper than paying a collection agent and getting some of their money beats getting none of it. As a single mom it can get very scary having all those letters and calls coming in. be proactive from the beginning by talking with your creditors and making payment arrangements that you can conceivably keep. If you are able to pay off a large amount at once this can be a boon for you. If you have a 5000.00 debt you can offer to payout at 3000.00. Most companies will accept a reasonable payout offer. Many businesses are more than happy to assist a single parent to break down the payments into more manageable installments. They see it as a win, win you get to repair your credit and they get a return on their investment.
It may seem like a daunting process at first but remember slow and steady wins the race. You should also be aware that timely payments are a major factor in repairing bad credit. Once you have made your arrangements pay the scheduled payments on or before the due date if at all possible. This is what credit companies look at when you apply for a loan. Paying your rent, utilities and other household bills on time can help you get that home loan in the future. Do not get caught in the trap of making an arrangement that is detrimental to your total household financial budget. It is perfectly acceptable to haggle to get a payment arrangement that will be easy to keep. Smaller payments at specific intervals are the best.
Practice Proper Financial Management Habits
As a single mom you face a unique challenge when it comes to budgeting. Not only are you the sole provider for the normal household expenses you often do not have help with the extras inherent in child rearing. Filing for child support should not be put off. Unfortunately the reality is even after you win the award you may not regularly receive the payments. This is an added stress but when the money does come in use it wisely to catch up on bills instead of splurge spending. Do not be too proud to get the subsidies offered by the government. Food Stamps, insurance coverage for minors and childcare expenses are all being subsidized with government funds. Check with your local Aid to Families with Dependent Children office or go online www.acf.hhs.gov an apply today. If you have small children under the age of five or are pregnant you might also qualify for WIC (women, infants, children) this programs supplements the dietary needs of nutritionally at risk families. http://www.fns.usda.gov/wic/aboutwic/ by clicking here you will be redirected to the landing page for the program. Once there you can get started on the application process and be directed to your local offices.
The results of these applications can be calculated into your budget as income. If you are single due to divorce it is time to ask yourself if you can really afford to remain in that house or if selling it and getting into a smaller more affordable home would not be the best option. Children are resilient and moving could be the best thing for you and them in more ways than one. you may even need to downgrade the auto you drive. If the monthly payments and insurance on it is taking up the lion’s share of your reduced income it only makes sense to get a more affordable car.
The finances should be a family affair. Children can understand it better when you are forced to say “no” to something they want if they have a clear understanding of why. Even if they scoff the attempt is well worth it. It can also be a time for you to train them on budgeting not only money but also time. As a single mom time is at a premium. You will need a budget for it just as you do for your finances. For the ins and outs of making a time budget visit http://litemind.com/time-budget/, they offer practical advice and step by step instructions. For a household budget visit http://www.moms-living-debt-free.com/envelope-budgeting.html, http://singleparents.about.com/library/Calculator/bl_budget_calculator.htm, http://www.bankrate.com/finance/money-guides/free-household-budgeting-work-sheet.aspx, http://www.mint.com/, http://www.betterbudgeting.com/budgetingtools.htm, any of these sites will afford you practical easy to follow instructions and worksheets to get started on your way to becoming debt free.
5 Simple Steps to Fix Your Credit History
If you’ve managed to muck up your credit, you are not alone these days. Due to the housing crises and the resulting fallout around the world, many people have found their once-green credit now in the red. If you have bad credit as a single mother, here are some things you can do to make sure you fix your credit.
1. PAYOFF all credit card debts
If you have bad credit and you are still using your credit cards, it’s time for a mental shift. You need to watch your spending like a hawk and make sure that you stick to a budget. Do not buy anything with a credit card unless you can pay it off. And if you do buy something, PAY IT OFF immediately. The idea is to start rebuilding your credit by showing responsibility with your usage of credit, should you have any. If you cannot afford the credit card debt, you are going to need to call your credit card company and work out a debt repayment plan. Don’t let your credit card bill sit — the accumulated interest will trap you in debt and your credit rating will tumble.
2. Use Credit to Build Credit
It seems a bit of a contradiction — to build credit, you need to have credit and use credit. If you have bad credit but still have a credit card, great — make sure you don’t cut up that card. The idea is to use the card responsibly and pay it off each month. You might even want to put a positive balance on the card each month — this can help to further improve your credit. If you don’t have a credit card, you need to get one. There are two types of credit cards available: unsecured credit cards and secured credit cards. The “regular” credit card is an unsecured card. A credit company like VISA extends you a potential “loan” up to a certain amount. A secured credit card requires a deposit to be placed on the card; that deposit becomes the balance of the card. Deposits are usually 500 or 1000 dollars. In time, the secured card can be converted to an unsecured credit card and your deposit refunded. Having a secured credit card lets you build up your credit history.
3. Look at Your Credit Report
It’s a good idea to look carefully at your credit report to see where you stand. You are legally entitled to a free credit report from one of the credit agencies like EQUAFAX once a year (this can change depending on legislation). Look at the report and see where you stand. If you notice any errors or inconsistencies, challenge them. You might be able to improve your credit by challenging credit reporting errors (they do happen) in as little as a month. All credit reporting agencies will allow you to do so.
4. Change Spending Habits
Bad credit is often the sign of irresponsibility with your finances. If you are the sort of person who loves to shop when you can’t afford it, be careful. Spend only what you can afford and treat any credit you have like it’s money you already have in your bank account; if you can’t afford something, don’t buy it with credit.
5. Avoid High Interest Loans
There are some programs called Payday Loans which offer loans to people with bad credit or no credit. You should avoid these programs, as the interest rates are some of the highest in the industry. A payday loan can destroy your credit and get you trapped in debt if you don’t pay them off. That’s not to say you can’t use one of these loans should you need it, but make sure you pay it back ASAP.
Final Word on Repairing Credit As as Single Mother
It may seem that the mountain of debt you are currently faced with is insurmountable. Just remember that with time and patience even mount Everest was conquered in the end. If you get stuck along the way do not give up start again and again until you conquer this debt. It is always best to go after a small one first to get that first success under your belt. Once you have achieved even a small victory the others will look just that much smaller.
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