August 2021 marks the 25th anniversary of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act. Numerous studies have been done to measure its impact on American households over the last 25 years. While it faced criticisms today and when enacted, it has helped single-parent-headed families have better lives in recent years compared to their counterparts a quarter of a century ago, according to Deseret News.
Financial difficulties are a serious problem that plagues many single, divorced parents. Having only a single income while raising children can bring anyone on the verge of bankruptcy for years.
Single parents struggle to balance their budget between childcare, clothing, food, utility bills, and housing payments. As a result, they are more likely to face bankruptcy, debt, and lower credit scores when compared to two-parent households.
As a single parent, it’s crucial to have a different financial plan than individuals who live with a partner, especially if you have a poor credit score. Good credit can make your life easier. You can qualify for better housing, job, and other financial opportunities.
There is still a way to thrive and develop ways to manage your money. Today’s article aims to help you find ways to lower your credit score.
Pull and Review Your Credit Report
The closest thing you can do to get a quick credit fix is reviewing your credit report. Everybody is entitled to a free report once a year from three agencies: Equifax, TransUnion, and Experian. You can request a credit report from any of them, and it will not affect your credit score. Review it closely and dispute any issues that you find.
Sometimes, there are simple errors such as wrong addresses or account numbers that may not belong to you. For complex ones such as debts listed twice or incorrect credit limit, they can affect your credit score. But no matter how simple or complex, reporting them can improve your score.
Make this task a regular job. Pull your annual credit report every year to make sure there are no mistakes. You will also need it for the next tip.
Fix Your Payments
With your credit report on hand, now it’s time to pay any balance that you owe. Accounts that have an impact on your credit score can come from debts on your mortgage, car loans, store retail cards, child support, and credit cards.
While paying your debts, maintain your payment history. CNBC recommends paying your bills on time or automate your payments to accomplish this. You can set up an automatic bills payment with your bank, or you can use automatic bills payment apps. Automating your payments is easy because you don’t have to worry about missing bills.
Pay Child Support
For divorced, single parents, past-due child support can appear on your credit report and affect your score. The only solution here is to pay your child support. If there are any disputes, ask a reliable child support attorney for help.
Avoid Using Credit Cards
If possible, stop using cards for the moment until you’ve paid enough to improve your score. Credit cards charge interest that accrues every payment cycle. You can end up paying for more if you spend money that you don’t have.
Also, don’t use your credit cards to pay off balances from other accounts. If you can’t seem to stop using them, call your bank and have your card locked.
Still, if your credit cards are a lifeline, stick to one or two only. Having too many cards will deem you a greater risk for creditors, which can lower your score.
Reach Out to Your Creditors
Creditors, lenders, and loan providers are always willing to work with those who owe them money, but only if you know how to negotiate.
Reach out to them. Call or send them a letter about your willingness to settle your accounts. Provide them with an explanation of how you’re going to pay your debt and when. Give them a time window of when you think you’ll be able to significantly pay most of your debts until its paid in full.
Most companies will answer and provide a lower payment schedule to help their customers. You can reduce your payment and even postpone them, which can give you enough time to adjust. Just make sure not to violate what you’ve agreed upon and that you will follow the settlement deal and pay your bills on time.
Be Patient
Improving a credit score needs patience. It doesn’t happen overnight. At the least, raising a credit score can take two months. But if your score is lower than the average 600 to 750, it can take years to recover.
