The Consequences Of Bad Credit

When you end up with a bad credit score there are a few problems you may start facing.

Borrowing becomes more expensive
A bad credit score will lead to higher interest rates. This will cost you a lot of money in the long run, like on a house mortgage.

Getting a credit card is a bit harder

Losing opportunities
A potential employer may think twice before hiring you. Maybe you have a lot on your mind trying to pay back all those loans?

Expensive insurance
Some companies think that people with money worries get in trouble sooner as well. So they charge higher fees. Some states do not agree on this so you better check your local legislation too.

Additional fees for late payments
This should be a wake up call! If you are having trouble making regular payments then the fees will make it even harder. The lender is trying to push you and get your act together.
They see the risk increasing and if you are not careful your assets are at stake.
It is time for a plan to manage your debt.

Does A Passbook Loan Help Your Credit Score?

When you have a savings account with your bank you can apply for a passbook loan. This is a small loan using your account as collateral.

The loan is very easy to get. The risk to the bank is zero because they have the funds on your savings account anyway. Usually they charge an interest rate of maybe 3 percent above the rate you receive on your savings.

The money on your account keeps earning interest in the mean time. As you repay the loan you will have access to these funds again.

Some banks report this loan to the credit bureaus. In that case it will help building your credit history.

Don't just assume your bank will do this. Ask them about it!

How To Build A Credit History From Scratch

When you just come out of high school you don't have any credit history. For many stages in life this history will be important so you need to start building one as soon as possible.

You can do this by using a secured credit card.

Start with depositing some money into a secured bank account and apply for a credit up to the same amount.

The bank has zero risk because you will not borrow more than you are able to pay back (your deposit, right?).

By paying back on time you have just started showing you are a reliable borrower and this will be your first positive mark on your credit report!

What Is Your Excuse For Not Knowing Your Credit Report?

You should have on excuse for not having a recent copy of your credit report.

Because once a year you can request one for FREE from the three best know credit agencies.

You should verify that all information is correct. Mistake do happen and you should have them corrected as soon as possible!

Wait no longer and read more about how to get your free credit report online.

Credit: Spend Today What you Will Earn Tomorrow

But what will you spend tomorrow then?

"No Money Down"

This is the trap most of us fall into.

You see that nice new car. Or the latest cool gadget. Even a bigger house.

But can you afford it? Every business will encourage you to buy today and and pay later. They make credit easy so their business booms.

Many people get caught in a spiral of ever increasing debt and thoughtless spending.

So the first step will always be to cut down on your spending. Cover the basics and make sure there is some money left at the end of the month. Not some month left at the end of the money ...

 

Managing your student loan payment

Imagine you have a student loan and you are finding it hard to get a job.

After a few months you find yourself in the difficult situation where the loan company starts a law suit and gets a garnishment approval. 

Next you find a low paying job and 15% of it is garnished from the start!

If on top of that you get into even more difficult times, like a serious illness, then it really gets tough.

You can always try and talk to the customer service of the collection company.

Maybe they have an ombudsman who will investigate your situation. He may even listen to your pleas and find a solution that gives you the chance to slowly build up your life again.

A lower monthly payment plan can do wonders and if you manage to make a bit more every now and then you can do a voluntary payment as well.

Don't be afraid to find te right peolple to contact. They are not always moneysharks.

Will declaring bankruptcy stop garnishment?

Judgments for consumer debt can be included in bankruptcy.

Having the debt discharged would definitely stop the garnishments. You really need to speak to a bankruptcy attorney to see if it really is feasible or the best option to file bankruptcy. It depends on how much debt you have.