Introduction: In this day and age we all rely on loans for a lot of
things. However, there is still a huge possibility for us to get bad
credit. Yes, bad credit isn't just caused by irresponsibility or
laziness on your part - there are different circumstances in life that
can cause you to become a victim of bad credit. Here are some ways to
avoid them.
Things You'll Need: Proper planning, some self control, budgeting skills, debit or prepaidcards
Step 1. Make a plan. Create a budget containing all your necessities and teach yourself to stick to your budget. You may come across things that you want to buy, but if they're not on your list, then don't purchase them unless there is a dire need to do so.
Step 2: Do away with Plastics. Swiping may be easier, hassle free and sometimes safer because you won't need to carry on cash along with you but this makes you dependent to it. Credit cards lure people to purchase things they don't really need because of the thought that it can be paid the next time around. When the credit card statement arrives, it shocks you to know that you have paid more of the interest than the principal itself. This will surely be the start of your debt problems.
Not having a credit card limits the possibility of you spending more than you can afford. If safety is your concern (if you don't want to bring cash, for example), then get a debit card or a prepaid card. This way, you only get to spend what you have and you don't have to deal with bank bills each month. Just make sure that your debit account is a separate one from your savings account. This way you won't end up spending all your savings should you be tempted to make purchases.
Step 3. In case you'really need a credit card, get something with a low limit, and pick a bank that offers the lowest interest rates.
Step 4. Do not be tempted to loan money for anything else except for your car and your mortgage. A lot of us loan money for a lot of unnecessary things. While loans always equal to fast money, they're also high in interest. The best thing to do if you want something expensive is to save for it and buy it when you have the money already.
Step 5. In case you are terminated from your job, or if you have an illness or injury that may prevent you from working for a while, visit your creditor right away. Let them know about your current situation. They will gladly fix up an arrangement for you so long as you do not default payments with them.
Tips:
It is very important to be prompt in all your monthly bills. If you have extra money, pay more than the minimum required payment for your loans. List down everything on your budget, and keep track of all the things that you spend.
Warnings: Do not apply or sign up for loans that require credit checks. These processes can lower your credit history.
Things You'll Need: Proper planning, some self control, budgeting skills, debit or prepaidcards
Step 1. Make a plan. Create a budget containing all your necessities and teach yourself to stick to your budget. You may come across things that you want to buy, but if they're not on your list, then don't purchase them unless there is a dire need to do so.
Step 2: Do away with Plastics. Swiping may be easier, hassle free and sometimes safer because you won't need to carry on cash along with you but this makes you dependent to it. Credit cards lure people to purchase things they don't really need because of the thought that it can be paid the next time around. When the credit card statement arrives, it shocks you to know that you have paid more of the interest than the principal itself. This will surely be the start of your debt problems.
Not having a credit card limits the possibility of you spending more than you can afford. If safety is your concern (if you don't want to bring cash, for example), then get a debit card or a prepaid card. This way, you only get to spend what you have and you don't have to deal with bank bills each month. Just make sure that your debit account is a separate one from your savings account. This way you won't end up spending all your savings should you be tempted to make purchases.
Step 3. In case you'really need a credit card, get something with a low limit, and pick a bank that offers the lowest interest rates.
Step 4. Do not be tempted to loan money for anything else except for your car and your mortgage. A lot of us loan money for a lot of unnecessary things. While loans always equal to fast money, they're also high in interest. The best thing to do if you want something expensive is to save for it and buy it when you have the money already.
Step 5. In case you are terminated from your job, or if you have an illness or injury that may prevent you from working for a while, visit your creditor right away. Let them know about your current situation. They will gladly fix up an arrangement for you so long as you do not default payments with them.
Tips:
It is very important to be prompt in all your monthly bills. If you have extra money, pay more than the minimum required payment for your loans. List down everything on your budget, and keep track of all the things that you spend.
Warnings: Do not apply or sign up for loans that require credit checks. These processes can lower your credit history.
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