25 Feb Signs of Approaching Bad Credit
Bad credit doesn’t happen overnight. While there may be some cases that it happens as a result of fraud or identity theft, in most cases it results as a by-product of our prolonged financial negligence. If you’re still unaware, or perhaps choose not to care about your financial disposition now, it’s about time you recognise the following signs that you’re right on track to the bad credit road.
Not Enough Credit
When your credit report contains nothing more than a few credit cards, maybe it’s about time you look into why you don’t have enough credit history. Are you worried of acquiring new credit, or have been rejected from your newest applications? Either way, both scenarios signal that something is wrong with your credit, or maybe you’re on your way to bad credit. It’s worth realising that having too little credit doesn’t do your credit rating any good either.
Too Much Credit
Meanwhile, having too many credit accounts can be as hurtful to your credit score as well. While there are those who can manage a dozen or so credit cards efficiently, majority of us will likely struggle when mortgage, student loans, auto loans, credit card debts, and many others are going on all at the same time. While these types of debts are important all throughout life, it doesn’t mean you have to take on all of them even if you can’t afford it.
You’ve Maxed Out/ You’re Close to Maxing Out Your Credit Limit
Maxing out or nearly maxing out your credit limit can mean that you have uncontrolled spending, which is something that your future creditors wouldn’t want to see. In fact, a good percentage of your credit score is determined by your credit utilisation – or the ratio of your balances to your credit limit. In short, it reflects how you use up the credit limit that is given to you.
It is important to keep your credit limit – and in turn your credit score – in check, by being easy on your credit limits. Ideally, you should not charge more than 30% for each credit limit that you have on various types of revolving credit.
You Always Miss Your Due Dates
Missing the due dates on your bills can only mean two things – you can’t afford to make payments on time, and that you’re surely on the road to bad credit. If you don’t have the cash to meet your debt payments on time, it could mean you have too many obligations or have insufficient income. Keep in mind that your timeliness with your bills has the greatest effect on your credit rating, and missing them too frequently can abruptly bring your score down.
You’re Unable to Sleep Peacefully at Night
Lastly, the effects of bad credit can be evident beyond your credit history itself, but they can manifest in your personal life as well. Being disturbed by thoughts of having too much debt is a sign that you actually do have too many of them, and that you’re credit might be spiraling downwards. If the damage goes to the extent that your personal, social , and emotional wellbeing are affected, it’s about time you face the problem and perhaps seek help as needed.