Do You Have Poor Credit?

Do you have a credit card?  Well if you do then you know that they can be wonderful life savers or debt traps!

Pitfalls

The problems with credit cards is that it can lull you in the false reasoning that you actually have the money you are spending when in truth you just took out a loan.

Just like any loan, you have to pay for whatever you bought at a later time. The philosophy of buying today and paying tomorrow is very popular in more developed countries.

The problem with that lifestyle though, is that credit card debt can quickly accumulate.  Those who spend indiscriminately often end up wishing they had never taken out the credit card in the first place.

The major challenge is the non payment of the entire balance owed on the card.  If only the minimum payment is done on the card, the interest can be staggering and cause a financial burden.

Consumers who have more than one credit card can also find it challenging to pay more than one bill on the due date.  It takes meticulous budgeting to ensure that the funds are there are to fulfill your economic obligations.

What if you don’t pay on time?

In more developed countries, consumers get warnings that if they rack up large amounts of credit card debt, this will affect their credit score.

Credit Scores

The credit score in those countries are often accessed by prospective employers, clients, bank loan officers and landlords.

This credit score will affect the decisions of those persons and organizations whether to extend a job or business offer. So those with bad credit can be easily identified and avoided.

In Jamaica, a similar scenario, has been under development.  This means that those with bad credit will no longer be able to hide under the radar as they rack up debt.

The Jamaican Credit Bureau provides information that will allow loan institutions (commercial bank, credit union, loan agency) to better assess the credit worthiness of a borrower.

Although at the moment the bureau is used by only financial organizations, it can be expanded to be used by others to determine the credit score

The credit bureau gives lenders information to better assess the credit worthiness of borrowers. This will reduce the waiting time for banks to make a decision on loan offers.

Therefore, it will make it easier for individuals to access loan facilities offered by banks and other financial institutions. Also, with a good credit score, borrowers can negotiate better interest rates.

It makes sense to keep accurate records and track your spending so that you don’t fall in the ‘debt trap’.

Spend wisely and ensure you pay your bills on time!

What’s your take on the issue? Drop me a line!

Teri Ann Renee Paisley

Gleaner Online Writer

Tags: credit card, credit score