11-Feb-2016 written by : FSI-Team
Being in a bad credit situation can take a toll on an individual not just financially but also mentally and emotionally. Outstanding balances on credit cards or other loans not only can lead to stress but more importantly can result in one ending into debt trap. This shall lead to sever impacting the CIBIL score and CIBIL report which in turn will make the person ineligible to avail credit. It becomes important for a timely intervention to avoid a situation where one succumbs to the constant pressure.
Stress owing to debt can manifest itself in multiple ways, including health issues such as disturbed sleep patterns, blood pressure going either high or low or for some people, overeating, binge eating or starving themselves. That’s only on the physical front. Emotionally too debt takes a heavy toll on a person and can give rise to severe depression, anxiety and can possibly even worsen an existing problem.
If you see yourself under pressure because of an outstanding debt that is dangling over your head, it is better to acknowledge the fact and take positive steps to correct it, rather than ignore it and hope that the problem goes away. While that will not happen, chances are that you will be unable to handle the pressure for much longer. Let’s take a look at what an individual’s possible options are when it comes to dealing with bad credit.
The first step would be to wake up to the debt situation so that you can move ahead and work out how to tackle it. If you pretend that all is fine and you do not have a debt burden to take care of, that would be a cardinal mistake.
Also, be real when it comes to estimating the debt you are in. At this stage every rupee that you owe counts and there is no point in denying the fact. Hence, come clean to yourself (and your spouse, if applicable) so that you can look ahead and start to work on the debt outstanding. Do not fudge figures and list down exactly how much you owe, and to whom. It can also be of great help if you can confide in a family member so that you have support and guidance to help you along.
If you find yourself dreading seeing the credit card bill as it comes in, or you quickly peek only at the minimum amount due, it is likely that you’re unsure how you are going to pay it all off. But if you really do want to put an end to all the anxiety about the rising debt you will have to closely examine all the outstanding amounts you owe. Sit down, put pen to paper and work out which of your debts is the most expensive – take into account the interest rate you pay on each and where you can begin.
Once you have understood just how much you owe it is a matter of deciding which amount to pay off first. You could choose to pay off the minimum amount due on all outstanding debt, and should you have any money to spare, pay off the smallest of the loans. Conversely, the alternative is to pay off all minimum amounts and then putting away any remaining money towards the payment that carries the highest interest rate.
While you can choose any option, paying off a large-interest loan is a good idea as it can save you large sums of money by way of monthly interest payments.
Understand your spending habits a little at length. Identify whether any situation such as depression or anxiety make you want to go on a spending spree. Do you purchase something only because when you buy it, you feel good if only for a short time? If the answer is yes, you are likely to have a spending problem that needs attention.
If your debt is mounting with no end in sight it is prudent to consult a credit health management company in order to work in a systematic manner to reduce your debt burden. With the help of a trained credit counsellor you can work out a repayment plan and start to slowly repay.
Remember that bad credit not only bogs you down, it also has a significant negative impact on your credit score. The more you owe (and have delayed or missed payments) your credit score is likely to go even lower. Given that your financial health and creditworthiness depends on your credit score to a large extent, you cannot afford to have a poor or bad score. Hence it is wise to seek professional help to detangle your debt.
Bad credit can stress you out, but with time and patience and financial discipline it is possible to sort it out and go back to leading a debt- and stress-free life.