In today's world, a loan is a common financial instrument to one and all. Unlike older generations where loan used to be a taboo and people will save through the life to buy houses or to fulfil other needs that required large amount of money, today's working person is open to seeking loans to meet variety of needs. From buying that new mobile phone to investing into own house, the loans are used for almost all purposes.
While the borrower seeks loan with all the intentions to repay in time, but small mistakes lead to turning that helpful loan into a bad debt. And as we all know, a bad debt leads to spoiling the credit profile and in turn making access to loan highly improbable. Read on to know the three most common mistakes that are to be avoided at all costs. If these four common faults are taken care of, you can rest be assured that you would continue to have a high credit score. Goes without saying that a high credit score not only gives you timely access to loans and credit cards but also help you in these at better terms.
What happens when you miss out on your meal? The sugar levels deplete and body reacts with fatigue and pain. It can even lead to nauseating feeling. Think of a situation where you consistently deprive your body of the necessary food with erratic timings and starving it for long hours. What will happen is that your body will grow week and start catching up viruses faster.
Similarly if you start paying with lag, rather than on due date, your payment patterns will get erratic and will become a norm. At Credit Sudhaar we have observed that persistent delayed payment of the EMIs is one of the common errors that lead to bad debt. It could be on account of some financial stress and or casual approach towards repayments. In both situations the loan can turn into bad debt. So ensure that the account is funded before the due date and payment is happening in time without any exception.
If you do not plan your finances and more importantly do not ensure that the planned budget is adhered to, there are chances of your loan turning bad. Effective planning is the key to streamlined finances. Most of the times, people miss to taken into account the additional expenses that keep arising every now and then. Car breakup, some medical exigency, money spent on function, and many other such expenses do not even reflect in the budget. It is important to keep a small amount aside for such unexpected expenses.
Ensuring that the planned budget is not deviated from is something that you would need to ensure. This is where most of the faltering happens and the whole effort of budgeting goes for a toss.
This is another big issue which is responsible for turning a loan into bad debt. No process is perfect and there are bound to be lapses. If you become one of the victims of such lapses, please do not let your repayment become victim of your unhappiness. You must understand that the service issue will get sorted out sooner or later. You may even have to follow up and escalate the matter to get a resolution, but a non payment will only lead to impairing your credit history which will have long term ramifications. Your loan will turn bad and will get reported to the bureau and will impair your ability to get a regular loan. You will only be looking for loans for bad credit score in case a need for funds arise.
Follow our finances closely, budget well and do not let the emotions come in way of repayment.