More Bad Credit Habits
I got a few emails about the bad credit habits that people have and I wish to thank especially Sheila for her comments. I had not exhausted the list on bad credit habits by a long shot. The other things is that people with bad credit always think that they can not do anything about them. The moment you think that you can not solve bad credit is the moment you get yourself in a never ending problem.
Some more bad credit habits include and are by no means limited to :
1. Making Minimum Payments Only
The moment you start making only minimum payments to your creditors is the moment you start going the path of a permanent debtor. Some credit card payments have been calculated to last for more than 50 years before they can be paid off if one is only making minimum payments. It might look like a great deal until you have paid for 3 years for a debt that has actually grown to a higher value than what was originally borrowed.
It is foolhardy to make only minimum payments especially for credit cards whose interest rates seem to be compounded monthly.
2. Charging For Everything
It is very annoying when you go to a dunkin donut and someone has decided to use his credit card to get a $3 coffee. It might be annoying to me but it is surely a recipe for credit disaster for the person charging every little expense on their credit card.
It is not evil to carry around $20 bill to pay off miscellaneous items that may occur. However charging for each and every little thing that someone is using when you have some change in your pocket is a bad credit habit.
3. Not Having An Emergency Fund
Before you move out of your current house, think about creating an emergency fund. Most financial managers insist on 3 months but I prefer a 6 months emergency fund especially after I was laid off. An emergency fund will keep you from trying to use your credit card if you have any type of emergency. This may include you getting laid off, your kids in hospital or any other thing that might just arise.
Ensure you are always are planning for those days when things just happen in your life.
All in all ,if one can keep from using credit the wrong way, you could be able save yourself a lot of agony trying to figure out what your interest rates are and if you should get a second mortgage on a home. Most of the time we end up in bad credit situations due to our own bad habits. Good luck.
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