The hard facts
There are many worrying things that can affect your credit stability and your status. Obviously, late payments
or payments in which you have defaulted on will have detrimental effects on your credit score and consequently the
way in which creditors perceive you as an honest and diligent borrower.
The one thing that you must consider is that a bad mark on your credit report will stay with you a lot longer
than many people realize. If for example, you have made a late payment or there is even a clerical error apparent
on your report, this may take 3 to 6 months, or in some cases, a full year to rectify and bring your credit status
back up to a desired level.
This means that although making payments on time, every time, may not always be possible, it is important to
talk to your creditors before the payment failure is filed. If you consider a credit score, there is a 500 or so
point bracket in which your score will be gauged. If you make a late payment or fail to make a payment completely,
this can drop your score by as much as 100, meaning a drop of up to 20% on your credit report is possible in a very
short period of time.
If you are considering declaring yourself bankrupt to get out of a financial emergency, you must first consider
the consequences seriously. If there is a possibility of a solution that will avoid making a declaration, this must
always be considered this as your most attractive option.
Bankruptcy will cause your financial status and your credit eligibility to drop immediately and any chance of
future mortgages, loans, or credit cards will be quickly diminished upon this particular form of declaration.
If on the other hand, you have exhausted all options and find no other means in which to rectify your financial
emergency, then declaring your self bankrupt is often the only option for many people in this situation. A
declaration of bankruptcy will be apparent on your report for up to seven years, meaning you must prepare for
multiple failed applications of credit and for approved loans of extremely high interest and strict terms and
Applying for credit with poor credit status
If you have a low credit score, or a poor credit history that is presented to any potential creditor, your
application may indeed be refused. This does not mean that you should now seek the next person that may indeed
approve a loan or credit application.
Multiple applications will actually be seriously detrimental to your credit score, consequently meaning that if
you already have a poor credit status you must consider your creditors seriously before you approach them.
Remember, it's harder to remove a bad mark from your credit score report, so numerous applications, especially for
credit that is not completely necessary, is an unwise move if you wish to keep your credit eligibility and
financial stability in the US today.
Possessing credit from multiple sources.
If you have ,for example, multiple credit cards with borrowed credit of over 30%, this will be seen as bad
credit management in the eyes of any future or potential creditors. You must try to consolidate all your loans to
within one or two cards only and clear the remaining balances of the cards that you do not wish to continue using.
This does not mean that you should cancel your old cards, as it is actually beneficial towards your credit status
if you have credit cards that are active with a healthy credit status. Creditors will see you as a diligent
borrower of credit and someone who is able to competently manage their finances from multiple sources.