By Michele Lerner
Mortgage Credit Problems Columnist

Individuals and families with debt problems may develop bad credit because of unemployment, divorce, or medical bills; however, just as often the need for credit repair begins when credit card use gets out of control.

Credit cards themselves are not bad--they allow people to make purchases without cash, provide a record of purchases, and offer a way to pay over time for a big expenditure. But many people find themselves reaching for their credit card for impulse shopping, and start spending their way into debt problems.

Signs Your Credit Card Debt Could Lead to Credit Problems

1. Credit cards are maxed out.
2. Only minimum payments are made each month.
3. Any credit card payments are skipped.
4. An increasing percentage of your income goes to credit card payments.
5. One credit card is used to pay off another.
6. A doctor's visit is delayed because you don't have enough credit to pay the medical bill.
7. Credit card payments are made with money meant for food or utilities.
8. A credit card must be used to pay for necessities such as food.
9. Emergency savings are being used to pay regular bills.

Debt Consolidation Loans and Other Tips for Credit Repair

To begin the credit repair process, one option for people with bad credit is a debt consolidation loan. Enter your information on this secure site and see if a debt consolidation loan is right for you. Reducing your monthly credit card debt into one lower monthly payment could help you begin to resolve your debt problems.

In addition to a debt consolidation loan, consumers with credit problems should try these steps to improve their bad credit:

• Create a budget. Your credit card payments should require a maximum of 10 to 15% of take-home pay.
• Avoid borrowing more than 15% of your annual net income.
• Save at least 10% of your net income each month to build your emergency fund.
• As you pay down your debt, begin the habit of paying off credit cards in full each month.

While credit problems can seem overwhelming, consumers with a plan can overcome their bad credit. See if a debt consolidation loan is the answer to your credit repair needs by filling out the form on this page.

Sources

http://www.ConsolidatedCredit.org

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• Refinance or home equity loan for debt consolidation?
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