How to Avoid Bad Credit

This is the most important and impactful thing you can do to avoid bad credit. Your payment history and timely payments are a large part of what a credit score reflects. Consecutive late payments drop your score significantly. Even one late payment can drop your credit score a couple of points. With continuous late payments, you may be looking at repossession, collection, charge-offs, and foreclosure. On-time payments are one of the best ways to avoid foreclosure with bad credit.

If you know which bills of yours report directly to the credit bureaus, you can know crucial in the months you’re short for cash. Sometimes bills must be skipped if you’re short on cash. By knowing which bills report to the bureau, you can prioritize those to protect your credit score. These usually include credit cards, mortgages, loans, etc. While your other bills shouldn’t be ignored, they can safely be skipped until the next month to protect your credit score.

The second biggest factor that influences your credit score is your amount of debt. Your credit score can be negatively affected if you have large amounts of debt. The credit bureaus also look at your credit utilization (the amount of debt you have compared to your original loan amount or credit limits). Making regular loan payments and keeping your credit card balances low can reduce your debt amount. A negative side effect of having too much debt is being late on your payments. If you have large monthly payments that need to be paid to your debt, it is more likely that you’ll fall behind on payments.

Good money management can be learned, and it is one of the greatest skills to have. Having difficulty managing your money can lead to increased debt, late payments, and, ultimately, a bad credit score. Learning how to budget not only can help you protect your credit or improve your credit, but it can help you reach your financial goals.

While transferring your credit card balance to an interest-free card can be a smart move if your current card has a high-interest rate you can’t keep up with, it shouldn’t be done with excess. Many borrowers accumulate so much credit card debt that they keep transferring to other cards to avoid the impending due date. This is a terrible mistake and can ultimately cost you more money.

While sometimes co-signing can’t be avoided, you should move forward thoughtfully and carefully. Only co-sign with someone you completely trust and know well. Whatever you co-signed for will appear on your credit rating, and the co-signers payments, or lack thereof, reflect on your credit score.

Think long-term rather than short-term when applying for credit. While applying for credit, it may be tempting to only think of how it can help you now, but this can get you in trouble. Thinking about how the additional payment will affect your monthly budget, and even how this will affect you in five years, can be incredibly beneficial for your current and future self. And when you need a title loan, come to VIP Title Loans.