Finance Debt

What Is Bad Debt Credit

Published at 05/11/2012 19:26:23


While there are good debts, there are also some bad debts too and these bad debts give raise to a bad debt credit. When you use debt to pay for consumables, you are not amassing good debt and this might lead to a situation where you have a bad debt credit. This is the kind of situation that leads to an unsound financial situation and to bad debt credit.


Credit card debt is usually dimmed as a bad debt credit because of the type of items that are bought using the credit card. It is always advisable not to accumulate a bad debt credit through the purchase daily consumables like clothes or food. Should you buy these types of consumables using your credit card, you should pay the balance in full each month or this might lead to a situation where you have a bad debt credit.

Any kind of debt that you get into because of a vacation is a bad debt and might lead to a bad debt credit. You might get some relaxation from your holidays and this might make you more productive when you are back from the holidays but there is no appreciable value of a vacation and this might lead to bad debt credit. It is advisable not to use debt to pay for a vacation especially if you are unable to afford as this might bring you to a situation where you have a bad debt credit.


Not all debt is bad and the difference between a good debt and a bad debt credit will influence every loan you apply for or get and might also influence whether you get a new job or not. On the other hand, having a good debt and making payments on time on the debt will give you a good credit rating which will in turn enable you to borrow more money at more improved interest rates. A bad debt credit will on the other hand decrease your chances of getting a loan and because of a bad debt credit; you might end up getting a loan but with very high rates of interest. Any form of bad debt credit will not help your financial situation.

Any form of debt that charges very high interest rate for something that you do not really need is a bad debt credit and the worst form of a bad debt credit is credit card debt because it attracts one of highest interest rates. It is very easy to overindulge yourself with credit cards and this is one of the easiest known methods for getting into a bad debt credit situation. The best way to salvage your financial situation is to pay credit card debt down or to pay it off totally. Start with the highest interest rate card and then move to the debt with the next highest interest rate until you have cleared all your bad debt credit.

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It is also possible to get into a bad debt credit situation when you are always late in making late payments for money that you have been lent or if you completely don’t pay borrowed money. This kind bad debt credit will definitely affect your credit rating and also negatively affect your financial situation. Bad debt credit debt will keep you from getting loans and credit cards. While we live in a world where it is impossible to avoid debt, it is important to distinguish between bad and good debt and to always avoid bad debt credit situations.