Low Credit

There is a big difference between having low credit and bad credit. Having low credit means that the amount of money you can borrow is limited. Having bad credit means that you can’t borrow money from lenders that base their decisions on credit scores.

A person with low credit might be able to get a credit card that can only give you a small amount of credit say $300. A person with bad credit probably won’t be able to get a credit card because they have a history of not paying their debts.

Low Credit Can Quickly Lead To Bad Credit

A low credit score can quickly turn into a bad credit score if a person is not careful in their use of credit.

A person with low credit might get issued a credit card with high interest rates and a small amount of credit. They could quickly use this credit up and not be able to pay off the card. This will get reported to the credit bureaus which will make their credit score worse.

Dangers of Low Credit

One problem with low credit is that a person with low credit can quickly get into a situation where they are making minimum payments on credit cards that give them no credit. This happens if a person makes a lot of charges but can’t pay them off. To keep from getting sent to collections the person then has to make minimum payments.

To avoid this people with low credit should try not to open too many credit card accounts. This can give you a wallet full of credit cards you can’t use.

Low Credit Can Be An Opportunity

The best strategy that a person with low credit should adopt is to increase their credit score. This can increase the amount of credit that a person with low credit can get. More importantly it’ll reduce the cost of that credit because it’ll lower the interest rates charged on that credit.

There are several ways to do this; the best is to simply not use your credit cards and pay off all open loans and credit cards as quickly as possible. This will make your credit score look better and wean you off the credit card habit.

Another really good strategy to use is to make a few small payments with your credit cards and pay them off quickly. This way the credit card company won’t raise your rate for not using your credit card. More importantly it’ll give you a record of paying off your bills quickly which can improve your credit record.

Low Credit

Low credit can lead to a host of problems for a person but it is certainly a better situation to be in than having bad credit.