DIY: The Basics of Bad Credit Management
It is true that a debt-free life is a peaceful life. Imagine not having to worry about several credit and loan payments every month, or having to take those annoying calls from collection agents? Imagine being able to sleep soundly at night without any financial obligations to think about. It is the ideal. However, in a time like today, incurring debts are often inevitable. With all the problems the economy is going through, there will come a time when people will need financial assistance so that they can meet certain goals and move on in their day-to-day lives.
Unfortunately, as creditors and financial institutions continue to come up with different credit programs, many people have developed an inclination to spend and borrow beyond their means. This is where bad credit records begin to take form. Having a bad credit history is something that no one should want to have. That's because it can affect important things such as applying for loans.
When faced with bad credit record, how can one cope? Is there a bad credit to do list that people can refer to in times like this? Not really, that's why when talking about what to do when you have bad credit, the most important thing to understand is the difference between good and bad credit management.
What exactly is Bad Credit? Is it Reversible?
Your credit score is an indication of how well you manage your finances, like in paying off your debts on time. The better your score is, the higher your chances are of being approved for other better loans in the future. A bad credit score may mean over-limits, late credit card payments or no payments at all. Experts note that, although a bad credit score may improve over time by making up for the delayed payments, one's actual credit history may still reflect such delinquencies for up to seven years.
Understandably, this may still impact one's credit record to some degree. When faced with bad credit, other people may opt to seek the help of financial institutions that offer credit management services. However at this point, it is important to realize that you, yourself can manage your bad credit. The Financial Consumer Agency of Canada has several helpful tips on how to do this:
When talking about credit score, it is important to deliberate on bad vs. good credit. By understanding where these two differ, a borrower may know clearly when his or her habits become detrimental to his or her credit standing. The aforementioned tips are just a couple of to-do when faced with a bad credit record. Bad credit may not be totally reversible, but this does not mean one cannot improve his or her situation. The key is still to understand where you stand in terms of your finances, and to realize up to how much you can only spend or borrow.
Unfortunately, as creditors and financial institutions continue to come up with different credit programs, many people have developed an inclination to spend and borrow beyond their means. This is where bad credit records begin to take form. Having a bad credit history is something that no one should want to have. That's because it can affect important things such as applying for loans.
When faced with bad credit record, how can one cope? Is there a bad credit to do list that people can refer to in times like this? Not really, that's why when talking about what to do when you have bad credit, the most important thing to understand is the difference between good and bad credit management.
What exactly is Bad Credit? Is it Reversible?
Your credit score is an indication of how well you manage your finances, like in paying off your debts on time. The better your score is, the higher your chances are of being approved for other better loans in the future. A bad credit score may mean over-limits, late credit card payments or no payments at all. Experts note that, although a bad credit score may improve over time by making up for the delayed payments, one's actual credit history may still reflect such delinquencies for up to seven years.
Understandably, this may still impact one's credit record to some degree. When faced with bad credit, other people may opt to seek the help of financial institutions that offer credit management services. However at this point, it is important to realize that you, yourself can manage your bad credit. The Financial Consumer Agency of Canada has several helpful tips on how to do this:
- When it comes to credit card bills and loan payments, punctuality is the best policy. Always pay your bills on time.
- Try to pay off your bills in full on or before your due date.
- Try to pay off your total amount due from your credit card in the shortest possible time.
- Never go over your credit limit.
- Minimize the number of credit applications you make. "If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score."
- Make sure you have a credit history. This will serve as the documentation of the money you owe and the amount you were able to pay back
When talking about credit score, it is important to deliberate on bad vs. good credit. By understanding where these two differ, a borrower may know clearly when his or her habits become detrimental to his or her credit standing. The aforementioned tips are just a couple of to-do when faced with a bad credit record. Bad credit may not be totally reversible, but this does not mean one cannot improve his or her situation. The key is still to understand where you stand in terms of your finances, and to realize up to how much you can only spend or borrow.
