Tag Archives: Recession

Credit and debt problems during a recession

In the present times, the global economy has been badly affected and people need to make good and intelligent decisions when it comes to using credit cards and loans. Here are some tips that will help you in maintaining good credit practices during a recession period or an economic turndown.

The first thing that you need to do to stay out of debts is to pay your bills on time and keep a good credit record. This will help you to qualify for lower interest rates when you are looking for any new credit in the future. Don’t wait until the last minute to pay your monthly bills. If you are not paying your bills in time, the credit card companies will charge you high interest rates and late fees. The late remarks will be reported on your credit report and the future lenders will find you as a high potential risk to their finance if they have to offer you any new credit.

Credit report is a very prestigious financial document of an individual. It shows a list of all your revolving accounts and how you had been paying your credit card bills, loans, rent and selected other debts and bills. A credit score is a three digit number generated on the basis of how you have been using your credit and reflects your financial responsibilities. Based on your credit ratings, the credit grantors will determine the interest rates to be offered on any new credit.

In order to keep your credit in good standing, it is always recommended to pay your bills on time. While missing one or two payments over a long period of time may not significantly damage your credit history, if you are constantly missing your monthly payments, it will have a devastating effect on your credit ratings. You will face tremendous problems in getting approved for any new credit or loans. Lenders will look into your recent payment history to make sure whether you qualify for their loans or credit. Be particular in your payment activities if you are applying for a loan.

Having too many credit cards and not able to manage it is certainly not a good sign. There are people who collect a stack of cards, including those from stores and oil companies, several of which are rarely used. If you have too many credit cards out of which some of them are not used at all, creditors will think that you might use those cards sometime in the near future and get into debts. Even if you’ve proven in the past to be a responsible user of credit these “extra” cards could come back to haunt you the next time you apply for a mortgage or other loan.

If you find yourself in excessive amount of debt and having a hard time in paying it back, consult a debt settlement company to negotiate with your creditors for payment arrangements. They will analyze your present financial situation and work out a suitable payment plan with your creditors and walk you towards a debt free life.