- A poor credit history can complicate plans to purchase a new home or buy a car. Most large purchases require a credit history and a good rating, and if you don't have either, lenders and creditors will charge higher finance fees or deny your application. Too much debt and a low rating can also affect your ability to get low insurance rates. If you work in the banking or money industry, bad credit can hurt employment options.
- Careful budgeting can reverse credit problems and help put you on the right path. Knowing how much you have available to spend after bills helps you stay on track. It's smart to review you budget once a month, pay your essential bills first and on time, and then decide how much to spend on other things. Staying within a budget means you will have cash for essentials, and you'll avoid late or missed payments.
- Maxing out credit cards and then making small minimum payments to satisfy creditors doesn't result in good credit. Debt can lower your credit score. Lenders checking your credit to see if you qualify for a mortgage or auto loan will see your existing debts. They may decide you are overextended and deny your application.
- Practicing overall good habits can relieve any problems associated with credit. Rather than view credit cards as a means to acquire material possessions, use them as backup during an emergency, and always pay off the balance by the end of the month to avoid excess debts.
- Help is available to those who cannot relieve credit problems on their own. Professionals who work with non-profit debt and credit counseling agencies provide information and resources to help anyone struggling with credit and debt payments. After a careful review of your circumstances, counselors devise a realistic pay off schedule, negotiate better terms with creditors and manage your accounts.
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