Using a credit card is not without obstacles. When using a credit card without control or facing an emergency, you might be stuck in a problem of bad credit that is difficult. If you are currently looking for ways to deal with bad credit, consider the following three points. Follow the steps one by one, so you can be free from debt and can solve the problem of bad loans.
Avoiding Bad Credit
Allocate Credit for Productive Debt
It is very clear that there are two types of debt that need to be considered, namely productive debt and consumer debt. Productive debt is a debt whose value always grows from time to time. This type of debt helps you to make money and help to invest, and not to waste money. Examples of this type of debt include credit by a graphic designer when buying a new laptop, which can support it in order to produce more quality images, which bring additional income. That way, even though he owes money when buying goods, he can still pay the installments and even leave money to save.
After knowing the difference, then you already know that you should always allocate debt for the type of productive debt. This is done so you can avoid bad credit, and keep making installments.
Use according to your ability to pay
After knowing both types of debt, you must also consider the ability to pay. Even though you already know the debt will be productive, you should reconsider the ability to pay. If indeed you are a graphic designer and want to buy a type of laptop that is considered to be able to support your work, try taking other choices with almost as good quality, but still be able to support your work. This will protect you from bad credit because of inability to pay.
Know the Total Delinquent Debt You Have
Before finding out how to deal with bad loans, of course the first step must be started by knowing the total outstanding bills. If you have multiple debts at once, make sure to calculate carefully. Do not forget, also pay attention to how much interest, as well as other costs that must be considered such as late penalties or administrative fees that must also be paid. If you still have savings to start paying off arrears, you can use the minimum payment method for a while, then immediately pay off the remaining arrears so that it doesn’t accumulate too long, because paying too often with a minimum payment does not help you get debt free faster.
Stop Unnecessary Expenditures
How to deal with bad credit can also be done by starting to cut all expenses incurred. Begin to divide again what types of expenses are required to continue to be done every month, then choose which expenditure should be stopped.