There are a lot of people in the United States with bad credit, and that number keeps going up. Bad credit doesn't just happen to people who are lazy. Many people who work hard and try to do the right thing end up in situations that ruin their credit. The best way to avoid this is to pay attention to the signs that can tell you you're heading toward something that could ruin your credit.
If you don't have health insurance, it's a sign that you're going to have trouble paying your bills. Statistics show that a big reason why people end up with bad credit is because they don't pay their medical bills on time. As the cost of health care keeps going up, getting sick or hurt could put you in a lot of hard-to-pay-off debt. If you don't have health insurance, you might want to think about getting some. If you use all of the available credit on your credit cards, this is another sign that your credit is going to get worse.
A big reason why so many people end up with bad credit is because of credit cards. People who don't use them right can end up in a lot of trouble because of the high interest rates, late payment fees, and automatic default. Your credit card balance should be as low as possible. You should only use your credit card when you have to. Always pay your bill on time, and do everything you can to avoid maxing out your card. Many people also make the mistake of paying for too many things with the equity in their homes.
If you want to remodel your kitchen or bathroom, it might be a good idea to use the equity in your home. However, you should be careful when you do this. Before you borrow against the value of your home, make sure you can easily afford the monthly payments. You want to stay away from situations where you might not be able to pay your bills. You could end up with bad credit if you live from paycheck to paycheck or don't save enough. About 40% of American families have less than $1000 saved up, according to research.
This is scary for more than one reason. First, if something goes wrong, you won't have much money to help you out. This will make it possible for you to use a credit card or payday loan, which you want to avoid. This will get you stuck in a cycle of debt that is hard to get out of. There are a lot more chances that you will fall behind on your payments and hurt your credit.
Because of this, if you live from paycheck to paycheck, you should start saving money. Throw away any bills you don't need. Saving money is an important part of getting rich, and even if you make a lot of money, you're not getting ahead if you live from paycheck to paycheck. If all you do with your credit cards is pay the minimum balance, it will be hard to pay them off. It could take up to 30 years to pay off your credit cards, and if you stop making payments, it could hurt your credit.
Cosigning a loan for someone else is another thing that can hurt your credit. Even if your credit is good, the person you're co-signing with might not have good credit. If they decide to stop making payments on the loan, you will be held responsible because you also signed for the loan. Co-signing for a loan is something you should never do. Your credit can also be ruined if your home or car has been foreclosed on or taken away from you.
