Bank finance articles and tips

One wouldn't think that it is possible to protect your credit when significantly in debt, but there actually are ways to minimize the damage. However, to understand how to protect your credit when in debt, you must first understand how your credit gets damaged

Damaging Marks

The fastest way to bruised or damaged credit is failing to pay your debts. Even one missed payment can cause a serious drop in your credit score. Multiple missed payments results in your account becoming marked as delinquent, which is flagged immediately on your credit report. Even an old delinquent account that has since been resolved can haunt your credit standing for years to come.

Another way credit gets damaged is by keeping usually high balances on your accounts. Creditors look at the amount of debt in relation to the credit limit of your account. If your balance soaks up more than 80 percent of your total available credit limit, your credit score will take a hit. Additionally, having too many open and active lines of credit can cause your credit standing to become tarnished quickly. Similarly, having multiple inquiries into your credit history also appear negatively on your credit report. If too many creditors are examining your credit history to evaluate your potential risk as a borrower, your credit standing could suffer the consequences.

A Protective Shield

Many people assume that their credit score is influenced by factors that are beyond their control. The truth is, everyone has nearly 100 percent control over their credit standing. All of the factors mentioned above could be prevented or resolved, as long as you are taking the necessary actions.

First, pay your bills on time, every time. Many creditors are strict with their due dates and being so much as one to two days late on a payment may end up pushing you into a delinquency status. If you are worried your payment may be late, mail the payment at least 10 days prior to the due date or pay electronically online or over the phone. If you are experiencing a financial hardship, contact your creditor before you miss a payment and negotiate an arrangement that suits your budget.

Second, keep your balances below 80 percent of your total credit limit and do not exceed more than 2 cards per person. This will ensure your debt to income ratio stays below the amount that causes concern among creditors. Always be sure to maintain at least one open and active card with a zero balance, this shows creditors of your ability to maintain a responsible credit account.

Lastly, make sure no one is inquiring into your credit without your consent. Restrict the number of people you allow to inquire into your credit standing to one per 6 months. Be sure to check your credit report often to monitor any unauthorized inquiries or changes to your credit report. Always be sure to dispute inaccurate information as quickly as possible. This is especially true of anyone who has recently filed bankruptcy. Monitoring a credit report post bankruptcy can ensure you get back on your feet as quickly as possible.

The Lee Law Firms aims to help local residents resolve their debt issues and achieve a financially healthy future. They provide high quality legal representation that helps lower monthly debt payments, stop wage garnishment,prevent foreclosures and repossessions, and stop calls from creditors. The Lee Law Firm bankruptcy lawyer in Fort Worth have many years of experience in all aspects of Chapter 7 and Chapter 13 Bankruptcy.

By Christopher M
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