Anyone who uses a credit card will probably have questions for their creditors at some point. For millions of Americans, probably including some people in Escondido, credit can be a mysterious concept to grasp, and pinning down the factors that play positive and negative roles can be hard to do. There is no doubt that credit cards can be very helpful if used correctly. However, credit debt is a burden no one ever wants to see get out of control. But, when it does, what are some of the questions our readers should be thinking about asking? A recent article addressed just that issue.
According to the article, one of the primary issues to address is exactly how much is owed. From a total credit perspective this can include not only credit card debt, but also mortgage balances and car loans. Taking inventory with an all-of-the-above point of view can help an individual or family sort out which areas need the most immediate attention.
Next, considering how much interest is piling up, as well as how much income is devoted to payments on credit debt, should be top-level concerns. Interest on debt can make a credit situation seem like a fresh start is years away if there is a high interest rate involved. When income-to-debt ratio is considered, the article suggests that no more than 36 percent of household income should be earmarked for debt payments. Keeping up on exact credit limits and the balances associated with individual debt obligations is also crucial. Letting a balance come too close to a credit card's limit will reflect poorly on a credit report.
Anyone facing a burdensome debt situation will likely be looking for help wherever they can find it. And, with the Internet and other resources, there is no shortage of opinions. However, our Escondido readers should keep in mind that in the most dire of situations, when the realization comes that repayment is simply out of the question, Chapter 7 bankruptcy could be a good option. Bankruptcy is intended to help consumers get out from under crushing debt and get a fresh start financially, and is a valid option for thousands of Americans every year.
Source: Fox Business, "Six Crucial Credit Questions You Should Know Answers to," Dawn Papandrea, April 26, 2013