Want to Avoid Credit Problems? Don’t Make These 6 Mistakes
There are two facts about credit that should really be written in stone. The 1st is that it’s incredibly easy to ruin your credit. The 2nd is that rebuilding your credit can be extremely difficult and time-consuming.
In fact, if more Americans realized how hard it is to rebuild their credit, and the damage that bad credit can cause to their financial life, you can bet that much fewer would rush out to use their credit cards.
If you’re keen on avoiding credit problems, most of which will stick with you for at least seven years, the 6 mistakes below should be avoided like the plague. Enjoy.
Mistake #1: Getting a credit card if you’re not prepared to use it correctly
Many consumers dig themselves into a deep hole of debt because, simply put, they aren’t ready to use credit and credit cards correctly. If you don’t really understand how money works, haven’t set up a budget and don’t yet have a steady income, it’s probably not a good time to get a credit card.
Mistake #2: Getting too many credit cards
If you’re a beginner with credit it’s probably a good idea to simply have one credit card until you’ve had practice in using credit, learn some basics about how money works and, frankly, are responsible enough to handle multiple credit cards. Keeping track of balances, payment amounts, the available credit that you have and more than one due date for all of those credit bills can make even experienced consumers a little confused.
Mistake #3: Taking on too much debt at one time
No matter how much money you actually earn every month, whether it’s $2000 or $20,000, if you have more bills to pay than money coming in every month you’re going to dig yourself into a hole of debt, and quickly. You’d be absolutely amazed at how many people make an excellent living and are still deeply in debt simply because of this one mistake.
Mistake #4: Not facing, and solving, financial problems
Many people make like an ostrich when facing financial problems and stick their head in the sand, but the only result that gets you is more debt and sand all over the place. Ignoring your financial troubles will only allow them to get worse, so face them, correct them and move on.
Mistake #5: Treating non-credit payments differently
While credit card amounts and loans like mortgages and automobile loans are reported each month to the big 3 credit bureaus, payments like utilities, Internet and cell phone bills aren’t. Many consumers make the mistake of neglecting these payments for this very fact but, if you default on one of these types of payments, it will definitely impact your credit, especially when a collection agency is called in to help collect your debt.
Mistake #6:Forgetting to adjust your spending habits after a major change in your life
If you move to a new city, have a baby, get a raise, get married or lose your job, all of these situations will affect your finances. Some will be positive but most will be negative and, if you don’t adjust to those changes, reevaluating your spending habits in the process, you might find yourself in a world of trouble, credit-wise.
If any of these mistakes are troubling you and you are looking for advice or answers, send us an email or leave a comment and we’ll get back to you with answers.