Potential Repercussions Of Your Financial Struggle

stressYour credit report is the reflection of how well you have done in the past regarding your credit arrangements. Overtime, how you do in these arrangements determine the score on your credit report, which in turn determines whether you have good or bad credit. Having explained these basic concepts, you need to understand that missing a few payments does not mean having bad credit. In fact, this occasional slip is something everyone is vulnerable to. Since having bad credit reaps serious consequences, it is important to acquaint yourself with the repercussions of financially struggling and how they go on to become the black marks on your credit report. If you are in a bad financial stage and have debt you cannot service, there are not a whole bunch of options to choose from. Here we discuss these few upshots that would result if you find yourself in a stage where you have more debt than you can service.

The first and most obvious repercussion would be simply missing payments. Whether you are talking about interest payments, loan repayments, or payments on a mobile phone contract, if you are struggling at the moment, chances are that you will fail to meet them. While missing a payment or two might not be very detrimental and in many cases, wouldn’t even matter, if this becomes a habit, you can be sure of finding your report tainted. This is because then your report will show how you took up more obligations than what you had the capacity to service, regardless of what the result for your failure was. At the end of the day, you are left with bad credit. Therefore, if you have missed a few payments, you can make up for it by being be punctual from the next time onwards.

Another potential repercussion would be to default. Now this is worse, as it involves you giving up on the pursuit of loan repayment. You are considered a default if you miss a series of different payments and the lender or provider gives up on you and either proceed forward or use an independent loan repayment agency to pursue the debt. Once you default on a loan or contract, your relationship with the current lender or provider comes to an end. This strikes to the your potential lenders or providers as a red signal, as it indicates that you have a history of being financially irresponsible and thus, is something you want to keep your record clean from.

Lastly, your lender or provider could simply take you to court. If this is the case, you will end up with a County Court Judgment (CCJ), which is a major blemish on your financial reputation. This is a fairly severe form of action and is not something all lenders or providers prefer resorting to. However, if you are consistently failing to meet your obligations, your provider has the legal and moral right to do whatever is in its wish and within the law to take back what it claims is theirs.