Bad Credit Alert! Heading Towards Bad Credit
Many people today have bad credit, and the numbers have continued to rise
. It is no longer completely true that it is the lazy people who end up with bad credit, although they do count as a small minority. The majority of people who fall into bad credit are actually the middle income people and people who are financially better off. Many hard working people who are well meaning end up in situations where their credit becomes ruined. How do these people end up in a financial fiasco? How does one foresee the warning signs of getting in to a possible bad credit situation, you may ask? There are definite warning signs to be aware of from mild to the extreme that will tell you that you are on the rocky and steep hill of a bad situation where your credit can be destroyed.
Should you reside in places like the United States; and if you don't have medical insurance, this is one serious sign that you're headed towards financial trouble. Medical bills are one of the fastest ways in the States how people get into situations that credit can get bad in a hurry because of the lack or no medical insurance. As the cost of healthcare continues to increase, getting sick or hurt could put you in debt that is difficult to get out of. If you don't have health insurance, it may be time for you to get it.
Maxing out credit cards is also a very bad sign for the road towards disaster to your credit. If you notice that you are "forced" to live beyond the credit limit of your credit card over a period of time (2 or more months) there is a recipe of disaster towards bad credit. No so surprisingly, more and more people are living just out of the bounds of their credit card limits and finding themselves in extra financial stress that could have serious consequences for their credit score.
Credit cards are a key factor that causes many people to end up with bad credit. Their high interest rates combined with late payment fees and universal default can make them a nightmare for people who don't use them wisely. The best solution for this is honestly is to keep the credit card balance as low as possible. Only use your credit card when you absolutely need it. By paying the credit card bill on time and avoid maxing it out at all costs.
Many people also make the mistake of using the equity in their homes too much to pay for expenses. This can cause people to potentially lose their home because they have risked their most valuable assets: their home.It is not to say that one should never risk their home to get a little cash, because home renovations can be costly, such as bathroom or kitchen renovations. Before anybody decides to use the equity of the home one should make sure that the monthly payments can be made on time and with with ease. By missing or defaulting payments can ultimately cost you your home.
A lot of people these days are living paycheck to paycheck. It is actually not so much as news, but more and more people are not able to save much money. It is sad to find that in a lot of research, most people, after paying what needs to be paid every month do not have much savings, if any at all. This brings us to our last point in this thought: many people do not have enough savings in their bank accounts for a "rainy day". This is also another sign towards the road of disaster for bad credit.
This is alarming for a number of reasons. First, if you get into an emergency, you will have little money or no money to protect you. The cost of living is getting higher and higher. People who have a family find it even more difficult to save, which is quite understandable. Daycare costs and just having children is costly. People who have a limited income and have a family to feed, clothe and provide for are quite likely to use their credit card or get a payday loan, which ideally, should be avoided. This will get you into a cycle of debt that is difficult to escape from. The chances that you will get behind on your payments and ruin your credit are dramatically increased.
Being a Good Samaritan can also put you in the bad credit books. It is human nature to want to help out a person you care for, whether it be your brother or sister, or your closest friend. Another thing that can lead to bad credit is co-signing on a loan for someone else. Even if you have good credit, the person that you're co-signing with may not. If they decide to stop making payments on the loan, you will be held responsible because you signed for the loan as well. It is best to avoid co-signing for a loan at all times. If your home or car has been foreclosed or repossessed, this is a factor that can also cause your credit to be ruined.
Even though saving money is harder than it is, you can do things to start to do it. Just take a long deep breath and start thinking of how you can save money. One place that you can start with is looking at all of the bills of the household. Get rid of bills that you don't need. Saving money is an important part of building wealth, and if you're living paycheck to paycheck, you're not getting ahead financially, even if you make a large income. If you are only paying the minimum balance on your credit cards, it will be difficult to pay them off. It may take as long as 30 years to pay off your cards, and you could end up with bad credit if you stop making your payments.
As it has been seen, even people who seem to have the income and financial means, more and more people are heading towards bad credit simply because they live beyond their financial means, getting deeper into debt. Actually no matter what the income level, people are getting into financial problems. By ignoring the warning signs of financial strain, anybody is steps closer to getting a bad credit that is harder to get out of that could cost people their sanity.
by: Teeny solomon
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