Friday, February 15, 2013

How To Avoid Bad Credit

As people say all the time, "Prevention is better than cure." When you don't have a poor credit rating, the best strategy is stay out of trouble. In this article, we will discuss tips on how to avoid bad credit.


3 Tips to Avoid Bad Credit

1. Pay Credits on Time

As if this can't be repeated enough, making regular and timely payments is key to preventing yourself from having a bad credit score. Timely payments surprisingly account to up to 35 percent of your credit score.

If you want to cancel out your previous issues related to late payments and inability to pay, then paying on time is a must.

2. Pay

Worse than late payments is not paying at all. This is an a-ha! moment for most people. So you should make sure that all your credit accounts are managed and organized well. Do not miss payment due dates and don't skip any payment.

If you are unable to produce the money intended to clear off the debt, you can call your creditors to inform them in advance. They may offer you consideration and understand your reason.

3. Have a Positive Maintaining Balance in Your Bank Account

When creditors learn that you are bankrupt, they will have you fill in the consequences. Bankruptcy in general indicates that you don't have the funds to pay for your loans. So you cannot have any sweet escape this time.

If you file and declare your bankruptcy, banks and creditors will be alerted and keep this in their records and your credit report for eight to 10 years. Yup, it's really this long. This implies that even if you have survived through this painful no-money stage after a few years, applying for loans will be more difficult with poor history.

End Notes

Having credits is like passing an exam paper. You cannot submit your paper late to your teacher in class; moreover, you cannot NOT pass your paper forward. Also, you cannot pass the paper without having any answers to bank in for points. Your credit performance is very substantial as an issue in deciding for your chance of approval (or denial) in credit applications. Avoiding bad credit is a must. If you want, you can include it as part of your New Year's resolutions. :-)