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simply do not need.

2. Talk to a credit counselor. They are there to help and not to take advantage of you! Many different people from all walks of life have resorted to credit counseling including those with minimal income and debt right up to high-profile business people. They can assess how much you can afford to pay per month, along with your regular monthly bills. This typically involves the credit counseling company taking over all of your credit related debts, closing out the accounts and then you repaying them on a set day every month. Interest rates are quite comparable and usually even lower than what your Visa or Mastercard rates are; sometimes even as low as 7 to 10% if your credit rating isn't scarred too bad. It will take a while to repay the credit counseling company, as well it will be noted on your credit rating that you have sought help from a credit counselor. So don't plan on going out right away and purchase that brand new car. But once the debt is repaid in full it will show on your record that you have faithfully repaid your debt and then your rating will improve. One thing to think about also - by repaying your debts the old fashioned way and leaving yourself short, it'll take years and years to repay. Most credit counselors can eliminate your debt within 3-5 years depending on the severity.

3. Declare bankruptcy. If you are at the end of the rope and nobody can help you out financially, it is a last-ditch resort which will ultimately cost you about $500-1000 and the loss of all your assets. However you will be completely debt-free. The drawbacks to bankruptcy are not nearly as bad as you would think. Bear in mind you will not own anything once it has been processed, but it doesn't limit you to what you can buy afterwards. Yes you have to give back the new car, but you can save some cash up and buy an older car to get you by for a few years. Bankruptcy will show on your credit record for seven years...but it doesn't necessarily mean you cannot get any form of credit during that period. In some cases people have been able to get small loans (usually from high-interest financial companies) within two or three years. All it will take to get back on track is a small loan, repay it on time or early and your credit will be on its way back to good status.

Going from bad credit to good credit is very much achievable even for the worst of credit ratings, so do not worry. You just need to find out which method of credit restoration is best for you. But remember...even with the methods listed above, there is also the most important ingredient in successful credit restoration:

Willpower.

Learn more about this author, Dean Holmes.
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