Good credit makes it fairly easy to make the purchases you need, for everyday living. Poor credit, on the other hand, can prove to be a substantial hardship. Credit cards have become a necessity of life these days not just a convenience. If you don't have a credit card the odds are you won't be able to book a hotel or motel reservation or rent a car.
If you're looking for a new job, poor credit may quash your chances as many future employers look at credit reports before they make the final decision to hire.
More and more people are heading down the path to poor credit. Some find themselves in this situation due to their own negligence, while others do not have adequate income to keep up with their payments. With the failing real estate market many home owners find themselves not only unable to refinance their home but can't even sell it at the price they bought it for.
If you are dealing with a large amount of credit card or other type of debt, be on the lookout for the following danger signs. Recognizing them early on may help you to avoid a financial disaster, down the road.
Sign number one. One of the biggest signs that you could be headed for trouble is the frequency in which you use your credit cards. If you have a tendency to pull them out, whenever you are short on cash, you could have a problem… especially if you are prone to impulse buying. Treat your credit cards as you would cash. Better yet carry only one card and use it just for emergencies. Set up a monthly or weekly budget for your expenses like groceries, clothing, and gas and put the money in an envelope. When the envelope is empty that's it for the month. No more purchases.
Sign number two. If you find that you are running to the ATM, on a regular basis, to get a cash advance your credit worthiness may be in danger. In fact, many financial institutions charge you a HIGHER interest rate on cash advances, than they do on actual purchases. There can also be a cash advance fee charged. Payments are applied to the current balance first rather than to the cash advance balance, so you end up paying that higher interest longer.
Sign number three. Do you pay just the minimum amount required on your credit cards, each month? If so, not only does it mean that you’ll end up paying a great deal more interest, it also means that poor credit might be on the horizon. Even if you pay an extra $10 a month, on each card, you will save a considerable amount of interest. Another alternative is to take the card with the highest interest rate and pay that card off first. Or you can take the card with the lowest balance and pay it off to give yourself a feeling of accomplishment.
Take steps before your credit rating plummets. It's easier to stop the fall now than try to climb your way back up from a poor credit rating.
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