by Sarah Williams

Created on: August 01, 2007

So you've made a few mistakes, made a few purchases that you couldn't pay for, made a few bad investments...and now you're marked with the scarlet letters "BC" for Bad Credit. The good news is that it's not the end of the world. The bad news is that it will take dedication and commitment to get yourself out of the hole that you have managed to dig.

The first step in repairing bad credit is to sit down with a financial planner, or a friend who you trust in the areas of finance, and make out a comprehensive budget that details all of your necessary spending needs vs. your income. Next, you have to make these numbers match...this can be difficult as you will have to make some tough choices. You might have to sell some of your beloved belongings, you might have to sell your vehicles, downsize your living situation, and give up the little luxuries that you are used to enjoying.

The next step in repairing your credit is paying off your debt. Most companies, including mortgage companies and credit card companies are willing to negotiate with you in order to avoid you filing bankruptcy or allowing your home to go into foreclosure, which will cost them money. Get ready to speak to some people who are not going to be very happy, but remember that your goal is to make as good as you can on these debts.

The last step is to start rebuilding your credit. One of the best ways is to get yourself a credit card and start using it for all of your everyday purchases, making sure not to exceed what you are bringing in, and then pay it off IN FULL at the end of each month.

The most important thing to remember is that there is a light at the end of this long, dark tunnel, and as long as you stick to the rules, adhere to the budgets, you will be able to rebuild your credit and have a fulfilling financial life.

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