All of us have some form of debt in our lives.
Whether it is a Master Card to buy an iPod off the Internet, car payment or a mortgage for where we live.
It is all considered as money owed.
We all have some type of bills but do we have any bad debt.
We will explore just what is bad or negative debt.
Negative debt is the type of bills that is not being paid on time as it should be.
Occasionally, each of us are late on a bill that we forgot to pay but for some of us it is a constant thing of being late.
I know at that at least once a year, that I forget to pay my water bill.
This is not negative debt.
If you are one of those people that has a car loan, Visa Card loan or a personal loan and are behind in your payments, you have created negative debt for yourself.
When you consistently paying your bills late, you have made yourself a financial risk.
This impacts on your financial score or FICO.
Ask yourself this question, would you loan yourself money? Being honest with yourself, you will say no.
If you continue to pay your debts late, lenders will not loan you any money because of your poor payment history.
It could be affecting your future if you want to buy a house or a car in a few years.
It is important to keep your bills current or it will affect your credit score.
If you have a Master Card with a money limit, it is important never to go over your money limit.
If you do, it will affect your FICO score long term.
One mistake will not penalize you but multiple times will limit your ability to get additional loans long term.
Here are a few basic tips to keep you out of bad debt problems.
1.
Stop using your Visa or Master cards until you can safely get all of your cards below their money limits.
So for a while, live on cash only till you can get your negative payment history back in line with your goals.
By doing this, it will help you pay down those high debts and help boost your FICO score in the long run.
2.
It is important to make your payments on time.
This is one of the biggest and most important parts of financial history repair.
When you have a bad payment history, working to make on time payments will start the ball rolling to boosting your FICO score.
3.
Hold off on applying for any new Visa cards.
It is important to keep inquiries into your credit history down because it boosts your FICO Score due to low inquires.
In conclusion, all of us have some form of negative payment history in our lives.
It can be a Visa card, car payments or mortgage payments.
It becomes bad or negative debt when we are constantly late in our payment history.
Preventing your charges from going over the limits helps your long term financial score.
Use your consumer cards wisely, but do not go deep into debt because if you loose your job, you could destroy your financial history in a short period of time with multiple late payments.
Credit is important because it allows you to do things like buy houses for our families to have a great place to live.