I’ve been doing a good number of Money Personality Workshops and once people recognize their money patterns and begin to make ch
anges, one of the first questions that comes up is what can be done to begin to dig themselves out of the hole in which they now sit. I’ve previously gone over some of the traits of the various money personalities and given steps to over-ride the particular spending behavior (in the case of substance abuse this does not count as a money personality trait but should be considered a co-morbid factor contributing to financial difficulties which must be tackled before the person can distinguish between the behavior driven by the substance and a true personality trait).
So, where do you start once you have recognized your trait and want to right the ship that is now listing to one side. Below are a few steps that while simple can fairly rapidly increase your credit score and provide that emotional boost to keep you on your current path.
1. Get rid of those store cards: It seems all kinds of businesses have begun to offer in-house cards with come-on
rates or special rewards and before you know it you are now walking around with a wallet full of cards. What most people fail to realize is that the more open accounts you have the lower your credit score, even if these accounts are current. Yes, your paying on time counts for something but the amount of potential credit you have overwhelms your payment history to lower you score.
2. Switch from a credit to a debit card only: The debit card is sort of the card of truth in that you can only spend the cash you have on hand. True, it is tough love but it puts you on the road to developing a level of discipline that prevents building up a revolving balance that can’t be paid off each month.
3. Work out a plan of repayment and approach your lenders: What what most people fail to realize is that if you approach your lenders with a plan of action for repayment, in a number of instances they may be willing to go 
along with it. You can structure the plan to ask for more time or even restructure the debt itself to lower the payments. One client even had a portion of her bills forgiven once she presented her plan. Lower payments increase the possibility that you will make on time payments and decrease your debt which helps raise your credit score.
4. If at all possible make more than the minimum payment: I often talk about tackling your mountains and one way to do that is to climb one mountain at a time. Start with the smallest bill and begin to make extra payments (not at the expense of other bills though) until you have as quickly as possible paid it off. This process instantly frees up additional resources that can now be applied to the next smallest bill and so on to the point that you have freed up enough resources to begin to tackle the largest bills. If you sat down and really reviewed your finance
s, there is always that one account that is only a few hundred dollars that you have been making just the minimum payment that could be eliminated if you paid a little more each month. Getting rid of it instantly eliminates a level of debt and helps your credit score.
5. Don’t be afraid to make comments on your credit report: Federal law allows you to receive a free copy of your credit report annually from all three reporting agencies at AnnualCreditReport.com. This is a genuinely free service and not a come-on with hidden charges. You can make comments to correct any errors you find or report that you have worked out a plan. They will require documentation so don’t be tempted to create a fiction that can come back to haunt you. It may require persistence but is worth it in that it may the deciding factor in a lending agreeing to work with you.
Recognizing the traits of your money personality is the first step on the road to a less chaotic life. Once you have looked in the mirror and realized that changes need to be made to begin the process of taking back your life; the above mentioned ideas can be some of your beginning steps. It may take a little time but if you follow them, you will begin to see your score improve
Normally, I would agree w/you about switching from credit to debit card.. The problem is, is that, a debit card is YOUR money, and a credit card is the BANK’S money.. The police that took my stolen identity report told me never to use my debit as a credit card… The credit card dept. told me that they monitor what goes on w/my credit card vs. the debit card… Also w/a debit card u have to use your Pin number- credit, there is none.
Chrissy,
I think you have to take into account that this is a post on “increasing your credit score after you have ruined your credit.” The very point is that a debit card forces you to use YOUR money and stop piling up debt. So your situation and someone who has out of control debt by using credit are two totally DIFFERENT situations. Using your pin is a small price to pay in terms of developing the habit of not spending money you do not have. So the question one has to ask is will not using a debit card become one more excuse to not control spending or is there a greater good?
Ok, I gotcha… 🙂 then again,nowadays the bank is so strict w/their new rules the ones who are abusing credit will learn their lesson. The failure of the economy the last few years has been a wakeup for the ones abusing credit..
Chrissy,
It is less about judgement and more about once the person has realized how their money personality has gotten them into a tight situation and begun the slow process of making the changes they needed to make in their behavior, there is always the question of how do I begin to repair the damage that has been done. Generally it is a step by step process and my post is designed to provide some beginning steps that will give emotional support on the road to control both of one’s self and money.