Getting Back on Track After a Financial Setback
A missed payment. An unexpected car repair. A medical bill you weren’t planning for. Or simply a month when there wasn’t enough money to cover everything.
Financial setbacks happen. And when they do, the effects can sometimes stick around longer than we’d like.
If a payment becomes past due, it may eventually be reported to the credit bureaus and affect your credit. That can make it harder, or more expensive, to borrow money in the future.
The good news? One difficult season doesn’t have to define your financial future. Rebuilding takes time, but there are steps you can take to start moving forward.
1. Start With Where You Are
If you’re behind on bills, the first step is simply getting a clear picture of where things stand.
Make a list of what’s overdue, what you owe and when your next payments are due. If you’re behind on multiple accounts, focus on keeping as many accounts current as you can while making a plan for those that are past due.
Most importantly, don’t be afraid to ask for help.
If you know you’re going to have trouble making a payment, contact your lender before simply missing it. There may be options available that can give you some breathing room.
For example, eligible Cotton Belt FCU members may be able to use our Skip-a-Pay program to skip a qualifying loan payment when they need a little extra flexibility. Contact us to learn whether your loan qualifies.
The earlier you ask for help, the more time you may have to understand your options and make a plan.
2. Know What’s on Your Credit Report
When was the last time you actually looked at your credit report?
You can review your credit reports from Equifax, Experian and TransUnion for free through AnnualCreditReport.com, the only website authorized by federal law for the free credit reports you’re entitled to receive.
You can currently request a free report from each of the three credit bureaus once a week. There’s no subscription or hidden fee, and checking your own reports through AnnualCreditReport.com won’t affect your credit score.
Keep in mind that your credit report and credit score aren’t the same thing. Your report contains information about your credit history, while your credit score is a number calculated using information from that history.
When you review your reports, look for incorrect payment information, accounts you don’t recognize or other information that doesn’t look right. If you find an error, you have the right to dispute it.
3. Make On-Time Payments Easier
Sometimes a missed payment happens because money is tight. Other times, life gets busy and a due date simply slips by.
Either way, creating a routine can help.
Consider setting up automatic payments for bills you know you’ll be able to cover each month. If you’d rather decide how much to pay each time, add payment reminders to your phone or calendar a few days before each due date.
The goal isn’t to create a complicated new system. It’s to make staying on top of your bills a little easier.
4. Give Yourself Some Breathing Room
An unexpected expense can throw off even a carefully planned budget.
A car repair, medical expense or home emergency can suddenly leave less money available for everything else. That’s why building an emergency fund can be an important part of getting your finances back on track.
And you don’t need to save thousands of dollars overnight.
Start with an amount that works for your budget, even if it’s just a little from each paycheck. Over time, those smaller contributions can build a cushion that helps when the unexpected happens.
5. Focus on What You Can Do Going Forward
You can’t change a payment you missed last year, but you can control what happens next.
Focus on habits you can maintain over time, such as paying bills by their due dates, keeping debt manageable and being thoughtful about taking on new debt.
If your credit report contains accurate negative information, there isn’t a legitimate quick fix that can simply make it disappear. Rebuilding credit takes time and consistency.
The important part is continuing to move in the right direction.
Sometimes Your Banking Relationship Needs a Fresh Start, Too
Past financial challenges can affect more than your credit. They can sometimes make it difficult to open a traditional checking account.
But having a safe, reliable way to manage everyday money can also be an important part of moving forward.
That’s why Cotton Belt FCU offers Second Chance Checking, designed for people who may have experienced banking challenges in the past and are ready for a fresh start.
Because getting back on track isn’t about where you’ve been. It’s about what you do next.
Ready to take the next step? Explore Cotton Belt FCU Second Chance Checking and learn how to open an account today.
