Living with bad credit is no joke. That’s precisely why debt collectors use it as their number one threat to intimidate you into paying, even if you can’t afford it. Better to go hungry every now and again than risk a lousy credit score, right? At a time when your ability to get a home, a car, a loan, a credit card, or even a phone all depend more than ever on your credit rating, taking a nasty blow to your credit can feel like getting cut off from the modern world. But it doesn’t have to be that way.
If you can prepare yourself for the realities of living with poor credit and the things you can do to lessen the worst effects, you can take away debt collectors’ favorite weapon.
The DebtCleanse system for eliminating your debt begins with a single, radical step: cutting off payments on all your unaffordable debts completely. Then you take the money you would have been paying and set it aside to pay for an attorney and settle your debt for a reduced lump sum later on. But defaulting on your debt like this is guaranteed to leave a black mark on your credit report that will stick around for 7 years.
DebtCleanse’s methods are meant for people who are facing truly unaffordable debt—debt that’s making it hard to cover basic expenses every month, or that is taking a toll on your health and relationships. If you’re dealing with unaffordable debt, there’s a good chance that your credit rating is suffering already.
Regularly pay late, or miss payments entirely? Those mistakes quickly erode your credit rating. Thinking about declaring bankruptcy to try to ease your debt burden? That will have a major negative impact on your credit that will stay there for 7 years, just as long as a default. In fact, Chapter 7 bankruptcies stick around even longer—10 years—which is just one of the reasons we say bankruptcy is a solution for creditors, not borrowers. The biggest difference between stopping payments and declaring bankruptcy is at least when you stop payments and take the hit to your credit, you’re no longer living under the burden of crushing debt payments.
Clear Unaffordable Debt with DebtCleanse
If you’re going to grapple with bad credit no matter what you do, you should do it on your terms. Here are a few ways to make living with bad credit easier to handle.
Living without a credit card can feel nearly impossible these days. We’re even seeing a rise (and thankfully, a rush toward bans) of cashless businesses that only accept payment via plastic. If your credit rating is poor, you may have trouble getting approved for a credit card. Or maybe after grappling with the pain of credit card debt, you just don’t want to go down that road again.
Thankfully, there are now plenty of prepaid debit card options out there. You can load whatever amount you like onto a card and use it anywhere you would normally be forced to reach for a credit card.
You could also consider a secured credit card, which are designed for people looking to rebuild their credit scores. You put down a refundable security deposit of any amount you choose ($200 is a common minimum), and that’s your credit limit. That way, you can’t accidentally overspend and put yourself back in a debt hole. If you pay off your full balance on time every month, you can build up some positive credit history faster than you might think. Just make sure to get one that reports your good repayment behavior to the credit bureaus.
Prepaid phone plans
Wireless providers run credit checks before approving you for a phone plan. If your credit is on the low side, they can ask for hefty deposits. And if your credit is really hurting, they may refuse to give you a plan at all, preventing you from obtaining a device that has become every bit as necessary as a credit card, if not more so.
Prepaid phone plans have become more popular than ever because they skip both the hassle of the credit check and the frustration of figuring out a wireless contract. Every prepaid wireless plan is different, from ones offering plenty of data and unlimited talk and text to ones that come with a small number of minutes per month and no data at all. Prices vary accordingly, so whatever you decide you really need, there’s a good chance you can find a plan that fits it exactly, and all without having to worry about your credit score.
Be up front
Potential employers may check your credit when considering you for a sensitive position, or because they (erroneously) think they can use it to get a sense of your level of responsibility. Landlords and property management companies run your credit to see if they can count on you to pay your bills before renting to you. Auto lenders do the same before approving you for financing for a car.
If you can spare yourself the headache of dealing with these credit checks, go for it. Maybe you can find a job that doesn’t require such invasive screening. Maybe you can find a private seller for your next car and pay in cash. Maybe you can offer your potential landlord a larger security deposit (just make sure it’s fully refundable). But for all the times when there simply isn’t a better option, the best thing you can do about your bad credit is to just own it.
Go in with a copy of your credit report printed out, and be ready to discuss the story of your debt, focusing on all the positive decisions you’ve made since then. People appreciate honesty. If you know they’re going to look at your credit history and you just cross your fingers and hope they don’t notice the unpaid debt, it’s all they’re going to see.
But if you go in prepared to discuss the situation that led to the debt, the steps you’ve taken to address it, and explain how what you’re asking for—an apartment, an auto loan, this great job—factors into that journey, they are far more likely to want to work with you.
(Author’s note: I’ve worked extensively with apartment hunters who have poor credit, and I’ve been amazed how often this strategy has worked. It tends to be more effective with private landlords who want to get to know their potential tenants personally than with large management companies, who often use algorithms to determine who gets accepted and who gets denied. On the other hand, those large management companies sometimes have an “accepted with a larger security deposit” option for people in a specific credit range.)
Acceptance is power
We will never tell you that having bad credit is fun, easy, or no big deal. It makes your life harder. It just does. But you need to ask yourself, is living with bad credit harder than living with unaffordable debt?
DebtCleanse founder Jorge Newbery went from a net worth in the tens of millions to being $26 million in debt practically overnight thanks to a natural disaster that obliterated his real estate holdings. And when he refused to pay, his credit rating went down just as fast. But as scary and stressful as it was to go from being on top of the world to feeling like he’d hit rock bottom, he had a moment of clarity. He realized that, because his credit had already taken the hit, the debt collectors couldn’t push him around with their biggest threat. He’d disarmed their favorite weapon.
That key realization was the foundation of what eventually became the DebtCleanse method—the understanding that if you can just learn to embrace your bad credit, you can give yourself the breathing room to collect yourself, dispute your debts, find creditor deficiencies, and eventually even settle your debts for far less than their initial value and begin getting your credit back on track.
Bad credit is a pain, but unaffordable debt is even worse. So let’s get started.
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