With the many sources of credit available to the average consumer, it is easy to see how many people get in trouble with debt at some point. You can get approved for many different credit cards, store accounts and loans even if you cannot afford to make the payments on them. This situation can seem bleak, but you can take the necessary steps to get out of debt.
Signs of Trouble
Using a little bit of debt is not necessarily a problem for responsible consumers. On the other hand, you can look out for some warning signs that tell you that your debt is getting out of control. For example, if your credit card balances continue to rise each month while your income stays the same or decreases, this is a bad sign. If you only pay the minimum payments on your credit cards each month, this is another sign that you are in trouble with debt.
Credit Damage From Debt
When you start to accumulate a large amount of debt, it can do significant damage to your credit profile. Part of your credit score is based on your credit utilization ratio. This is a comparison of how much debt you have to the amount of available credit. When this percentage is above 30 percent, it starts to lower your credit score. When you have several credit cards and store accounts that are all maxed out, it will hurt your score and you may not be able to get financing for anything else in the future until the balances are paid down.
Helping Yourself
When you find yourself in trouble with debt, you can develop a plan on your own to handle the problem. For example, you could try to cut back on your expenses by eliminating unnecessary items from your budget. Then apply any extra money that you have each month toward the debt. This might take some time to pay down the balances, but after a few months, it will start to make a difference. If you make your payments on time each month, it can start to help build your credit score back up.
Debt Relief
In some cases, you may be interested in hiring a company to help you with debt relief. Many companies advertise that they can help people in these situations. Before working with a company, make sure you are dealing with a legitimate provider by checking with the Better Business Bureau. These companies can often negotiate a debt settlement with your creditors. This allows you to settle your accounts for a percentage of what you owe.
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