Consider a bad credit history as a school card with many failing grades, with each failing mark representing financial pitfalls caused by irresponsible consumer behaviour. There are so many ways you can accumulate bad credit on your records, and you would find that it would be easy to make bad choices and deals with your finances.
The main cause of any bad credit have almost always been risky and irresponsible consumer behaviour, the kind where you spend so much in such a short time and carelessly unable to handle the after effects. Sometimes, people just attribute the problem of their bad credits to bad luck but it really is about making a wrong choice somewhere. Here are just some of the common ways of doing so:
One of the best examples is maxing out your credit cards and being unable to pay the interest you owe to your credit card issuers. Credit cards may give you a convenient way of making purchases and paying your bills with a simple swipe of the handy plastic gadget, but even that has a limit that should not be breached regularly.
Unfortunately, there are just some people like shopaholics and spendthrifts who are too used to using their cards that they end up maxing them out eventually - and they accumulate high interest rates while they are at it. If you keep maxing out your credit cards like this, this shows that you are an irresponsible and careless credit user and it would show up like a big failing mark on your records.
Another way of accumulating bad credit is not paying your bills on time, another irresponsible consumer behaviour that shows that you are directing your funds to something other than paying your taxes right. It also shows that you are a sloppy payer, and with a terrible sense of handling your financial responsibilities. Consider this as another failing mark on your credit history. Simply paying the bare minimum of the bills could also cause the same effect, as it shows that you have resorted to that because you have not been handling your money right.
Going bankrupt maybe one of the worst marks of a bad credit, just like the previous examples it shows that you are a terrible credit user and careless in handling your finances whether you are an individual or institution. And in today`s society, bankruptcy is like a stigma that would not only negatively affect your financial life at its onset but also even for months or even year after the event. Bankruptcy is not something that could be solved overnight, and the processes of doing so could take more than a year depending on how bad your situation had become.
Bad credits do more than just ruin your finances, but it also drags down other parts of your life with it. Your work could be affected, your family, and even your reputation. So handle your finances with care, and consult with a financial expert for some help if you need to.