When your credit score hits rock bottom, things can only get worse. At this point, you are left with nowhere to cling to as banks abandon you, insurance firms raise premiums, and mortgage companies attach hefty penalties to your plan. Even phone companies are not left behind in sidelining those with bad credit. They will decline the application for phone contracts and only offer SIM only deals or cash sales.
The good thing is that many bad credit mobile phones are now available in the entire UK. Once you demonstrate the ability and commitment to pay, the dealers will be ready to release the phone of choice. However, these phones come with special insurance that makes them more expensive compared to buying in cash. Once you secure a bad credit mobile phone, experts insist that you must embark on a vigorous plan of drawing and implement the following three plans.
A debt recovery plan
A debt recovery plan is a clearly defined strategy for tackling existing debts. One of the main reasons for the current poor credit is outstanding debts. Some have school loans, bank loans, mortgages, and even insurance related debts. A debt recovery plan is a comprehensive strategy that factors the cash available for clearing debts and appropriate prioritization. Many experts recommend that people with bad credit mobile phones start with the high-risk loans such as phone contracts and logbook loans. Once the high-interest loans are cleared, you can focus on other less risky credits until all debts are fully covered. Depending on the nature of the debts, you might consider debt consolidation so that you only handle one loan.
An emergency fund enhancement plan
Though you have several loans that must be cleared, it is prudent to have an emergency fund to cater for unforeseen dangers. If there is no cash for emergency, problems such as urgent medical cases will drive you to start looking for Payday loans that are very expensive. These will only sink you deeper into financial trouble.
To create and implement an emergency plan, it is important to set aside some monthly amount and direct it to the emergency account. This amount should be added until it reaches the equivalent of 6-12 months’ worth of your salary. To avoid rushing to the emergency fund regularly, ensure that an appropriate medical cover covers the family.
A credit score recovery plan
Perhaps credit score recovery is the most important. A credit score recovery plan is the summary of all efforts aimed at enhancing your creditworthiness. The plan should involve clearing the current debts, enhancing your credit history, and creating a good relationship with lenders. You should also focus on timely payment of all utility bills to avoid getting reported to the credit reference bureaus.
One crucial component of this plan is correcting errors in your credit score report. Often, the credit reference agencies make errors because they rely on third parties that can be late or omit crucial personal details. Ensure to correct errors on the credit report every six months until you fully get out of debt.