4 Big Credit Mistakes To Avoid

4 Big Credit Mistakes To Avoid

In today’s growing digital world, credit is becoming more and more common. In fact, many people swear by the convenience of credit. While the benefits of responsibly paying down a mortgage, car payments and credit cards are certainly well-known, the drawbacks of missed payments and the impact on your good credit score can be devastating. If you’re finding yourself in a position of financial distress, you may be at a loss as to how you can fix your situation. In times of panic, people often make these same mistakes thinking that they’re bound to erase the problem. Don’t get caught up in these banking blinders with your personal accounts.

Quitting Credit

While it may be tempting, giving up buying anything on credit altogether isn’t a very proactive plan. After all, credit history is an important asset to have in this society in order to get ahead. When the going gets tough, open the lines of communication with your service provider and work out a deal that can help you both reach an understanding. Many companies have hardship programs that can temporarily assist you without damaging your credit score, while still keeping lines of credit open.

Avoidance

Possibly the number one tactic by those who are panicked about their credit situation is to avoid the creditors and collections altogether. Most bad credit incidents will be stricken from your record in seven years, but that amount of time is a high price to pay and will negatively affect your financial dealings in the meantime. Always be aware of your credit report and what it says, instead of turning a blind eye to what could be relevant information to help your situation.

Hiring Scammers to “Fix” The Problem

Credit repair companies often appeal to desperate people in an attempt to make money off of your misfortune. Consider the bottom line that if it was as easy to boost your credit score as these companies suggest, everyone would have fabulous credit. The truth about credit repair companies is that they are generally useless and expensive. The only way to get out of a bad financial situation is time and hard work, paired with determination.

Paying Credit off with Credit

As tempting as it is to use a credit card to pay off another credit card, this game will cost you money in the long run as it wastes your precious time. You effectively manage to charge yourself more in fees and interest by transferring these balances than you would if you paid off small amounts at a time.

Reference: 5 Best Actions to Increase Your Credit Score in 60 Days

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