Why People Have Bad Credit | Advice From a Debt Lawyer

credit report paper

Most people don't set out to have a bad credit score. In fact, most people put in significant effort to maintain the best credit score they can in order to allow them to purchase their next car, home, and other things they need. However, bad things happen to good people, and sometimes life throws some real, unavoidable curve balls. Many are able to bounce back from their bouts with bad credit, but others need to ask for court intervention to rid them of their debts. So, what are the most common reasons that a person has bad credit? Here are a few typical bad credit scenarios that any debt lawyer often comes across.

1. Too Much Credit Card Debt

Ask any debt lawyer and they will tell you that the number one thing that ruins a credit score is credit card debt. Many people start out with the best of intentions, but they soon find that the "buy now and pay later" way of life is just too appealing. It is not uncommon for credit card companies to send credit card offers to people who have not requested such offers. Credit card companies may also increase credit lines to people who have good payment histories. A credit card, if used properly, can boost the credit score. However, having more than 30 percent of your credit balances charged or being maxed out significantly harms your FICO score.

2. Medical Bills

Medical bills are a common expense listed on credit reports. Some companies pay more attention to their presence than others when deciding whether or not to grant someone credit. However, if medical bills remain unpaid for long enough and go to collections, they wreak havoc on the score. Attempting to pay these bills and keep them off your report altogether is always best. Most medical facilities have reasonable payment plans. If you ask any debt lawyer, they will tell you that these small bills can truly have a dramatic impact when they become collections accounts.

3. Poor Debt Management - Living Beyond One's Means

Making poor financial decisions and living above one's means are two additional common causes for poor credit. Learning how to manage debt is a grave challenge for many people today. Unfortunately, for people who do not learn how to budget early in life, it may take a time of serious struggle before they develop financially responsible practices. Simply paying the minimum amount on credit card bills each month is better than nothing, but it is not a sustainable plan in the long term.

4. Significant Life Changes

Significant life changes such as moving, divorce, or job loss all have the power to negatively impact credit reports. When payments are missed, even for one month, it is marked on the credit report as a slow pay. Slow pays hammer the score into the ground and stay on the report for an extended period of time. They reflect inconsistency in the payment history, as well as poor debt management. Credit reports do not take into account the fact that some things, like job loss, may be out of a person’s control; the report simply shows how much a person owes and whether or not they have made their payments on time.

Even people who have a great credit score may find themselves in unexpected situations that negatively impact their credit. Thankfully, there are tools available to help people in these scenarios. Some companies will reduce the amount owed as well as interest rates, provided a person is willing to keep making payments.

If you find that you have an overwhelming amount of debt and don’t know where to begin to take your financial situation back into your own hands, we encourage you to contact the offices of John E. Pytte, your Savannah and Hinesville debt relief attorney. Having a good credit profile is something that takes constant maintenance, and we understand that it is not always easy. We look forward to meeting with you for a free consultation.


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