It’s only natural to push off dealing with credit problems. On the one hand, it’s uncomfortable and can be a little degrading. On the other hand, there is always a chance that things could improve and that everything will work out.
The problem is that every day you wait costs money. And that means that small credit problems can turn into big credit problems pretty quickly. If that happens, your credit score can sink and that in turn can make the problems even worse. Your interest costs can go up and up and at some point you may not even be able to get new credit.
No doubt about it, credit problems demand immediate attention. Here’s how you know when it’s time to get into gear:
When You Can’t Pay Your Bills Every Month
If you find yourself in the classic robbing-from-Peter-to-pay-Paul financial trap, this is a definite sign to get help. The fact that you have to resort to various schemes in order to pay your bills is a huge warning sign that something isn’t working and it’s time to ask for help.
If you only run into this problem once in a blue moon, it may not be a problem. But if you can’t pay your bills several times a year you’ll likely resort to borrowing. This might help you bridge the gap short-term but please don’t become complacent. Sooner or later this monster is going to rise up and smash you Pilgrim. And the longer you wait to address this, the harder that smack down is going to be. Why suffer that abuse? Doesn’t make sense to me.
When Your Credit Scores Fall Hard
If you are tracking your credit scores on a regular basis – and you should – and you notice that your scores are either declining gradually, or they take a sudden dive, it’s another dire warning that you need to get help with your credit.
The problem with a declining credit score isn’t just that it makes you “look bad”, but that it makes you look bad to a very important group of people and institutions – lenders!
Serious drops in credit scores have all kinds of bad outcomes, including:
- Rising interest rates on your existing credit lines
- Higher than advertised rates on new credit cards
- Frozen credit lines
- Reduced credit lines on open accounts
- The inability to get new credit cards and loans
- Fewer job opportunities
- More difficulty getting mortgages or finding a place to rent
- Higher life insurance premiums
If your credit score takes a nose dive, it’s definitely time to get help with your credit. Until you do, nothing in your financial situation is likely to get better.
When You’re Losing Sleep and It’s Affecting Your Health
If you find yourself losing sleep, feeling stressed, or experiencing some other physical pains as a result of your credit problems, you need to get help with your credit as soon as possible.
Stress from seemingly insurmountable problems can lead to all sorts of unpleasant medical outcomes, including heart attack, stroke, and even sudden death. In this way, fixing your credit problems can be something akin to treating a serious medical condition.
Apart from the potential to cause a medical catastrophe, credit related stress can cause you to be ineffective both in your ability to deal with your credit problems, and even in your life. You may find yourself becoming gradually less effective on your job, in your home, and with your social life.
You need to put a stop to all of that as soon as possible. The only way to do so is by getting help.
When You Are Being Hounded by Collection Agencies
If you are being bothered by collection agencies, the alarm bells should be ringing, and the red lights should be flashing: it’s time to get help with your credit!
All of your problems will be magnified by the constant harassment of collection agents calling you dozens of times each day, each looking to get money out of you. It will be even worse if they call you at work, or if they call your neighbors.
Collection agents are experts at increasing your day-to-day stress with collection calls and threatening correspondence. They’ll threaten you with serious legal action too and this pressure will be dangling in front of you at all times. They’ll threatened you with everything from judgments, to tax liens, to garnishments to jail time. Who needs to deal with that? Not me.
Collection calls are not something that you should ever learn to live with. As soon as that starts happening, you need to get help in putting a stop to them immediately.
Finding Light at the End of the Bad Credit Tunnel
If you are having credit and debt problems as I’ve described above it’s time to do something about it. You only live once and living like that isn’t much fun. You can either take matters into your own hands or recruit a pro to help sort things out. If I was in that situation, I’d probably hire someone to take of this stuff. I know that when I’m stressed, I’m not very effective so having someone else who knows more than I do and is a pro would be really attractive to me. But everyone can make up their own minds when it comes to that decision.
Have you ever had the kind of problems described above? What did you do about it? What would you do differently now?