Bad debt is a financial curse. Whatever the cause, it can be very difficult to get out of once the cycle starts. Debt problems are recorded on your credit report, which lenders look to when deciding whether to supply you with a line of credit. Not only is bad debt troublesome in itself, but it also limits your options for suture loans.
When Bad Debt Becomes Bad Credit
If banks and financial institutes look at your credit report and see you as being problematic, then you will find it difficult to secure loans from them, and this can restrict your financial growth and planning.
If lenders do decide to grant you a line of credit, you will find that they squeeze you with higher interest rates, and generally offer less favourable terms than if your credit report were clean. This is because they see you as being high risk if you have deferred on past repayments.
So bad debt has at least two negative consequences: it is a stressful financial situation which puts extra pressure on you to make repayments, and it limits your potential to take out more credit from future lenders.
Credit repair can put a stop to this spiral, and help you to fight your way towards a more financial comfortable future.