Bad credit can greatly affect your loan approval and credit card scores. It doesn’t have to happen if you pay your obligations on time. Being a responsible borrower knows how to and when to pay to avoid penalties. Delayed and missed payments, either intentional or unintentional, will leave a bad mark on your credit scores. These scores are like your report card at school where subjects with low grades have comments. This is so much alike your credit card report. Keep in mind that your scores reflect what type of borrower you are. Depending on your scores, you can be identified as high risk or good borrower.

Crises do happen and you’ll never know when it is going to hit you. Job loss, sickness, accidents and even marriage can be the cause of financial stress. Because of these reasons, you end up making late payments, or worse miss important payments. Delays will reflect on your credit report. The question is how can you improve your credit card score? Is there an effective way to avoid bad credit? Provided here are effective steps on how to avoid bad credit:

Avoiding Bad Credit

  1. Pay on time – Follow the repayment schedule and do not delay or miss a payment. When making your monthly budget, prioritize your bills, this way you will avoid any delay in payments. Use a planner, calendar or set alarms to remind you of your obligations. If you have an organized planner and budget, you avoid the risk of missing a payment.
  2. Avoid maxing out your credit card – Use 50% of your credit limit. Exceeding or maxing out your credit card will cause you bad credit. On the other hand, maintaining high balance can also cause negative impact.
  3. Communicate with your credit card provider – Before you sign the deal make sure you understand the fees, interest rates, and penalties. Make sure you understand it. Let them know when you are in a financial distress. Most of them want you to settle it and offer you alternative ways to be able to pay. They also want to avoid using legal services and will most likely encourage you to pay to settle the account.
  4. Do not apply/open new credit lines – This can be viewed negatively and credit card scored may drop from 20 – 30 points. The best thing that you can do is ask your current lender to increase your credit limit rather than opening a new one.