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Spotting Credit Trouble
Its not uncommon for people to have difficulty handling credit, especially
when theyre just starting out. The best insurance against having this
happen to you is to establish a realistic monthly budget and stick to it.
Your payment cards should fit comfortably into this budget and can actually
make tracking your budget simpler.
warning signs - find the easy clues
before you dial 911 - call these people
in control - take charge of your charges
Know the warning signs
If you find yourself working overtime or an extra job to keep up with your
expenses or payments, YOU MAY BE IN DEEPER THAN YOU SHOULD BE. You also
shouldnt have to use money from savings to pay for living expenses,
except in an emergency.
If you need to borrow money to pay off another debt or loan (or if you need
to get a new credit card to pay off an old one), its time to develop
a new plan. The same advice applies if you have reached your credit limit
on your account. Late payments, calls or letters from credit agencies, denied
or revoked creditthese are all signs that your good credit history
may be in jeopardy.
What to do if you spot trouble
Start by drastically reducing your card usage. If necessary, leave your card
at home or place it in a different area of your wallet as a reminder.
If you havent done so already, SET A REALISTIC BUDGET WITH ACCOUNT
PAYMENTS AS A TOP PRIORITY. Make at least the minimum payment every month.
Set a specific timetable for paying off your debt.
Dont panic. If you cannot make certain payments on time, contact your
creditors immediately. Theyll want to work with you, and together you
should be able to figure out a realistic payment schedule.
Keep in mind that a bad credit rating can have serious negative consequences
down the road. It benefits you to try to find solutions to any potential
Ask for assistance
The National Foundation for Consumer Credit (NFCC) is a nonprofit organization
providing INFORMATION ON FINANCIAL AND CONSUMER TOPICS. They can refer you
to one of more than 700 local Consumer Credit Counseling Service (CCCS) offices.
Call the NFCC directly at (301) 589-5600, or for an NFCC referral to the
CCCS, call 1-800-388-2227. Your CCCS office may also be listed in thecommunity
services section of the local phone directory.
General information on consumer credit is available in published form by
calling the Federal Trade Commission at (202) 326-2222. For answers to specific
questions about credit, contact the National Consumers League at (202)
Finally, be wary of any private services that claim they can erase
a bad credit history, usually for a large fee. Changing an accurate credit
history is legally impossible. Instead, work with a budget and your creditors
to reclaim a credit history youll be proud to call your own.
Don't forget you are in charge
First, BE CAREFUL ABOUT CHARGING LARGE IMPULSE PURCHASES ON YOUR ACCOUNT.
If its a great price today, itll still be a good deal tomorrow,
after youve had time to think it over. Finance charges on a large purchase
can far outweigh that special discount.
Second, avoid taking a cash advance to cover your normal daily expenses.
(Paying for a groups meal on your card while pocketing the cash can
be a variation on this theme.) If you cant cover your regular expenses
this month, you probably wont be able to do so next month either.
Third, always keep a ballpark figure of your current charges in your head
(or on a piece of paper in your wallet). A few weeks of unmonitored spending
can follow you for months. You should never be surprised when your statement
Take this credit quiz
Feel like youve got your credit and finances under control? To find
out, take this little True/False quiz.
You start the week with money in your pocket, end the week with none at
alland have no idea where it went. T F
Youve paid one credit card bill with a cash advance from another card.
Your budget has these categories: fast food, movies, CDs, and all that
other stuff. T F
You often buy on the spur of the moment, because hey, its only
money. T F
You figure that using your card to pay for everyones pizza and pocketing
the cash is a great way to look good and avoid going to the ATM. T F
Answer True to any of these questions? If so, you should take a peek inside
and do a little extra reading.
Since December 1999 - last modified: February 22, 2012