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Start 2021 as you mean to go on by rebuilding your credit in Hamilton part 2

Start 2021 as you mean to go on by rebuilding your credit in Hamilton part 2

Continuing on from Tuesday’s post about improving your financial health for the new year, we are going to look at making small changes and gaining control of everything that’s going on.

Begin trimming your spending

Your budget spreadsheet should identify some quick wins in terms of spending. Areas where you could reduce outgoings without it impacting your way of life. Getting gas at a cheaper gas station, not buying coffee and a donut with your gas, not buying quite so many coffees while at work, buying a cheaper lunch, and so on.

These items can all mount up and can make significant inroads to your situation.

I use coffee a lot in these examples as I reduced my own outgoings just through coffee. I would spend $4 each morning on coffee on my way to work. I would then spend another $4 for the drive home each day. $4 x 2 x 261 working days saved me $2,088 per year.

Just in coffee!

I didn’t go without my coffee. I just made my own at home and took it with me. I then refilled my cup at work for the drive home.

I’m sure you can find examples in your own spending where changing something small can make a big impact. Start slowly and gradually build them up until you can cut no more without impacting your way of life more severely.

Consolidate your borrowing

Depending on your situation, you may find a consolidation loan beneficial. It may seem counterintuitive to borrow more when you’re already in debt, but this is different. You use a consolidation loan to pay off all your other debts so you have a clean slate except that single loan.

It’s a single outgoing, a single payment and an opportunity to take back control. It won’t suit everyone but it is definitely something to consider.

Use a credit card wisely

So far we have concentrated mainly on getting life back on track. Now we have control, we can begin rebuilding credit. For that we can use a credit card.

Get a credit card with a reasonable interest rate and use it for daily purchases. Use it for gas, for groceries or whatever. Make sure to set up automatic payments every month so you never miss one and pay off the balance every month.

Over time, this will begin helping your credit recover and create a positive history of paying on time and handling your debt.

Play the long game

Rebuilding credit is a long game. By prioritizing expensive debt and paying it off with the extra money you find in your budget, you gradually reduce your debt utilization ratio and create a positive payment history.

Combined with sensible credit card use, you will begin seeing the effects within a couple of months. The more debt you pay off, the higher your score will climb. The longer you create that positive payment history, the higher your score will climb.

It’s not quick. It’s not easy but it is achievable.

If you need help with any aspect of car loans or financing a new vehicle, Car Nation Canada can help. Contact us via the web, email or phone and we'll be happy to help!

Lets get in touch!

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