5 Common Causes Of Bad Credit And How To Move Beyond It
Causes of bad credit can be things you didn’t really consider. But since bad credit is something that can haunt you for years, you could have problems in the future when attempting to take out personal loans, buy a house, and even get a credit card.
If you are doing well and trying your best to stay away from bad credit, there are several common causes of bad credit to keep in mind. Keep reading to find out the five most common causes of bad credit and look at our tips on how to use Texas title loans to move beyond bad credit.
The Most Common Causes Of Bad Credit
1. Making Late Payments
Making late payments is one of the most common causes of bad credit. Whether you make a late payment by mistake because you forgot or because you couldn’t afford to make a payment at that time, a late payment is still a late payment. What is important is to make sure that you make the payment as soon as possible and strive to prevent late payments in the future.
One of the best ways to prevent accidental late payments is to set up an automatic withdrawal payment plan with your bank account. This means that money will automatically be taken from your account each month when the payment is due, so you do not have to worry about forgetting.
2. Missing Payments
Missing even just one payment can cause creditors to flag your account. Once you are flagged, that can stick with you for roughly seven years. Multiple missing payments are one of the most common causes of bad credit.
If you have missed a single payment, you may not have to worry a lot. Many lenders will give you 30, 60, or even 90 days to make up the missing payment before reporting or flagging your account.
3. Maxing Out Credit Cards
Whether your credit card limit is $500 or $50,000, you are causing serious damage to your credit score every time you reach or try to exceed your credit card limit. This is definitely one of the most dangerous and damaging of the many causes of bad credit.
Be aware of your credit card limits and be sure to stay under your limits whenever it is possible to avoid unwanted damage to your credit score.
4. Filing For Bankruptcy
If you reach the point of no return with your debt, and you feel like paying off your debt is an impossible task that you couldn’t do in a lifetime, filing for bankruptcy is an option. Filing for bankruptcy essentially allows you to repay your debt using things like collateral and other ways to erase your debt. Erasing your debt allows you to recover from a major financial blow.
However, the biggest downside to filing for bankruptcy is that it is also the biggest of all of the causes of bad credit, and it will haunt you for at least seven years. If you feel like bankruptcy is the only option you have, meet with someone who specializes in finances first to consult them.
5. Foreclosing On Your Home
When you repeatedly miss mortgage payments on your home, the bank can foreclose on your home. This means that the bank takes ownership of your home. This, paired with late payments, are common causes of bad credit.
Not only could you lose your home, but you could have a tough time getting a mortgage again when you need one. So, it is important to talk to your bank and do everything you can to make mortgage payments on time.
Moving Beyond Bad Credit
There are several ways that you can move beyond bad credit. Paying off your debts and making payments on time are the top ways that you can work towards moving beyond the causes of bad credit that brought your score down.
If you find yourself in a position where you cannot make your payments, one option to consider instead of missing payments can be an online title loan.
Title loans don’t require you to have good credit. This means that you can get a title loan, even with bad credit. If you are considering title loans as an option for making your next payment, you can qualify for one from Texas Car Title and Payday Loan Services, Inc. in as little as 30 minutes.
You can start your process online by submitting a form on Texas Car Title and Payday Loan Services, Inc.
The requirements for getting title loans are simple. You need to be at least 18 years or older and have a government-issued ID to prove it, have a lien-free title for your car, truck, or van in your name, meaning that you have full ownership of the vehicle. You will also need to have the vehicle itself for inspection, and lastly, you will need proof of income.
Learn more about the process, or simply call 1-800-514-2274 or submit the online form to get started.
Preventing Bad Credit From Ever Happening
Working towards paying off your debt and making payments can be tough, especially if you find yourself in a difficult situation where you don’t have a steady income or your payments are more than you currently can afford, but you can still start making progress to improving your credit.
Don’t let these common causes of bad credit make you give up. Keep pushing towards getting your debts paid off so you can get your credit back on track.
Remember that it takes little steps to get over the mountain that bad credit has built, but with effort and time, you can move beyond it. And when you need a bit of assistance getting ahead, get in touch with us to qualify for a title loan.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.