Thursday, March 11, 2010

Bad Credit Vs. Good Credit

Posted by pucca at 8:55 PM

What is good debt? What is bad debt? Good debt is loaning money from the bank to start up a business. With proper management and focus, money invested would likely grow and multiply. Bad debt is purchasing the latest 3D plasma television when you just bought a new television last month.
Debt is ineveitable. Even the richest man on earth had debt once in their life. Getting in bad debt depends on the manner on how we use this owed resources.
Today debt and instant credit are part of our everyday lives. Many individuals use credit cards to spend more than they earn, and a few of these people actually build themselves a debt prison from which some never emerge. On the other hand, those who never use credit can be denied a loan or credit when they have a justifiable need or use for it. Using credit establishes a history of financial responsibility: Until you establish a credit history, your chances of qualifying for an important loan, such as a mortgage, are greatly reduced. So as I have said, credit is inevitable.
We should learn to use credit wisely. Here are some points to consider to be able to start managing our credits and debt wisely.

1. Gather recent account statements from your credit cards and other debts.- Doing this will help you identify purchases you shouldn't have made. Going over all your account statements makes you rethink. Did I really spent over 500$ at the spa last month? Cross out purchases and transactions that you think you can live without.



2. Review the interest rates and finance charges you currently pay on each account. - Owning 2 or more credit cards is not normal, but it does happen. Identify which credit cards charge you the most. Cutting of one or two of your credit cards gives you a feeling of being in control.



3. Take a fresh look at your household budget (or spending habits if you don't have a budget yet). Did you spent 300$ on ice cream last month? Know your needs and wants. Cross out grocery items you can live without. If you can't help but buy things that you want, buy them in moderation.



4. Think about your ability to stop using credit on a regular basis and what changes you might be willing to make to improve your financial outlook.

Just like what I said, bad credit and good credit depends on you. So better stop blaming the high interests your credit card has or even your underpaid job. You control your money. Do not let it control you.

 

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