Granted, there are a wide variety of different ways that you can ruin your credit over time, but do you want to know what the quickest and most dangerous ways are? Here are five ways that you can quickly and effectively destroy your credit.
1 – Break your budget.
Sure enough, if you want to take on more debt than you can reasonably deal with, then you should either forget to make a budget, refuse to make a budget, or simply refuse to stick to the budget that you make.
Budgets show you how much money is coming in, in relation to how much money is going out, and lets you plan to use your money wisely and effectively. If you take charge of your money by building a solid budget, you can build a good credit score for yourself on the other hand. Sticking to a budget is absolutely vital if you want to know how much income is coming in every month, and how much of that income is going to planned bills and unplanned expenses, which will help you conquer your debt and live in financial freedom.
2 – Make payments late.
Making your credit card payments, utility payments and other debt obligations late will increase your debt exponentially, which will have a significantly negative impact on your credit. Credit card issuers love to apply fees, penalty interest rates and other charges to delinquent accounts, even when you are late only by one day.
If you decide that you do not want to dig yourself into that much debt, then you should be willing to make your payments on time and in full. If a financial hardship is going to keep you from making your payments on time as planned or as agreed, then you should call your company up as soon as possible, letting them know sooner rather than later so that other provisions can be set up for you. Most companies will work for you as long as you are willing to display that you are making an effort, which is more than most people do.
3 – Only make the minimum amount due when paying off your credit cards and other loans every month.
There is absolutely a no better way for you to dig yourself into debt and keep yourself there than simply to make the minimum monthly payments on your credit cards and loans without ever attempting to pay more off every month. The low payments that are offered as minimum monthly payments are designed to keep you in debt, rather than to bring you out of it.
They are specifically designed to make money for the lender or credit card company, because they will charge interest and other financing fees for the long period of time that it takes you to pay the debt off.