Signs that You are Headed for Bad Credit

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Although reaching a bad credit status can be faster than building good credit, it could still take a while before you realize how much your credit score has dropped. These signs can give you a warning that you might be headed for bad credit, or worse, that you’re already there. 

You can’t sleep

There may be a number of reasons, even medical ones, why you are having difficulty sleeping every night. However, if you can’t sleep at night because you’re worried about debt collectors, then it’s an obvious sign you’re debt might be getting out of hand.

You’ve fallen behind on your payments

If you’re late on your payments, it could either be that you’re simply forgetting to pay your bills, or that you don’t have enough money to pay them. Either way, being late on your payments could be a bad sign that you’re nearing financial doom. Continuously doing this can hurt your credit score.

You only pay minimum payments

When you find yourself paying only the minimum on your credit card balances, it’s evident that you are cash-strapped. This habit can cost you more money going to finance charges and interests rather than balance reduction. Thus you are basically just dragging your debt along, and the more balances you have, the more it can hurt your credit.

You need a cosigner for your loan application

If your loan application couldn’t get approved without a cosigner, this just means that your credit is headed or is already at a bad position and lenders couldn’t trust you with a new loan.

You are avoiding your creditors

When you’re dodging calls from creditors and avoiding to open your letters and bills, it could be a sign that your debt has gone out of control. What’s even worse than this is that you might actually have no plans of fixing the situation and you just choose to hide from it.

You are fighting with your spouse

When your financial problems have reached the point that they now affect your relationship with your partner, it’s a clear sign that you might have hit rock bottom. Instead of stressing over it however, you need to come up with a financial strategy with your spouse in order to solve your problems together.

You have no savings

If you failed to save money, it’s either you are living paycheck to paycheck, or you have a lot of debts to pay and there’s hardly any more room to save. Either way, having no savings can put you in worse financial danger. If you have no cushion in case of emergencies, this can leave you needing to borrow and be buried in more debt.

Your interest rates have gone higher

Companies view bad credit clients as risky customers, which is why their expected action is to charge higher fees and interest rates. If you notice changes in your credit card rates or insurance premiums, you might need to review your credit report and see how bad your credit is.

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