The Cost of Bad Credit

The Cost of Bad Credit

Bad credit results in the inability of a company or companies to trust the individual seeking credit facilities in terms of their ability to repay the same at the exact agreed upon time. Every time you utilize credit, your details are collected from various financial institutions by credit bureaus, which in return grade you and generate your credit score card. This scorecard is used by credit providers in abiding to understand your credit behaviors.

Sources:

What is a bad credit score? PrivacyGuard

Improve Your Credit Score With Discount Credit Repair

How To “Fix” Bad Credit Score? Experian Official Website

 

 

 

Credit may be required for personal needs or business needs. The good credit increases your levels of attractiveness to any lender. One may need to understand what happens when you have bad credit? Here are some costs that you should be aware of: –

1. Bad credit decreases the ability to negotiate for facilities with good interest rates.

When an individual has good credit, they can walk into any credit provider and negotiate interest rates. The fact that you can prove to be reliable and pay your credit facilities on time levels the playing field giving you leverage over most. Bad credit may sometimes increase your interest rates because lenders make you pay for the risk. Always remember that your credit score heavily influences levels of interest rates and terms extended to you.

2. A bad credit reduces your attractiveness to many providers.

The inability to repay loans closes doors and makes you a riskier applicant to many lenders. No one wants to provide credit facilities to an individual or organization that has bad credit or has been listed. Creditors use the credit score to determine your repayment behavior and ability to repay loans.

3. Decreases your chances in getting jobs

There are certain jobs that we go after that requires one to have certain behavior or attitudes

towards money. For example, if you are to work for a financial institution, you will require a

good credit score to show your employer a certain level of discipline or strength of financial

well being.

4. Bad credit can be a potential threat to relationships

As a newlywed couple, you dream of getting children, the house with the white picket fence and even more. None of these dreams may be possible if the couple has to combine earnings and either party has bad credit. It would require time and discipline to improve the credit score which may cause some strain in the relationship.

 

With the increase in the cost of living in today’s world, it’s important that you review your credit score and work towards improving it. To avoid the costs of bad credit, you should do the following: –

 

  • Always pay your credit on schedule. You may think that you are getting away with it, but you really are not. Place the payment dates on a reminder at least 2 days beforehand and ensure that your balance supports your monthly repayments.
  • If you have a balance with a lender, always work hard to eliminate it. Do not let the amounts pile up. Occasionally, if able to pay an even bigger amount than your recommended, do so and the credit rating will improve.
  • Never leave old accounts open if not in use. Always close them so as not to accrue charges.
  • Always review your credit score report. These will help you understand your credit position.
  • If you have missed your payments due to any reason, ensure you repay them. Plan your income to accommodate current and past credit repayments.
  • Last but not the least, if you are having trouble repaying your loans, always contact the lender and explain your position before it’s too late. You will be surprised; they are always willing to help you improve.
7 Mistakes You Can Make When CFD Trading

7 Mistakes You Can Make When CFD Trading

A CFD (Contract for Difference) is one of the most popular financial markets that are traded online today. So much money is traded everyday by basically speculating on the rising and falling prices of the common fast-moving financial instruments like indices, shares, currencies, commodities as well as treasuries. It is however a very risky affair and a simple wrong move can leave you counting huge losses in the end. The same way, a right move can leave you enjoying great profit on your investment. That is why you should know about some avoidable mistakes that might leave you counting losses, and then you can be well prepared to avoid them.

1. Working without a plan

You need a plan to be successful in this trade. You also have to ensure that you are following through with your trading plan. You have to plan beforehand so as to know the kinds of instruments you will trade in, the maximum amount of money you will invest in it, how long you will be holding positions, the strategies you will use in trading among other things..

2. Going in blind

There are many factors that affect the prices of financial instruments like shares, currencies, commodities, indices among others. You have to understand all these and how they affect the price of the instrument you are trading in so as to bet wisely. Some of the factors to look out for in this case include weather and politics.Overtrading

3. Overtrading

The huge profits that one is likely to enjoy from CFD may push one to place more money than they are willing to lose on a single trade. This is a mistake, even if you are absolutely sure that the price will go the way you anticipated. What traders need to know is that CFD markets are very unstable and this means that prices can change to any direction abruptly. There is no sure way to tell how the outcome will be.

4. Not using stop orders

You need to use stop orders for proper risk management considering how risky this kind of trade is. Fortunately, these are some of the risk management tools that are readily available for CFD traders. They will help a lot in minimizing your losses.

5. Emotional trading

This happens when you start thinking of just how much money you have lost in the previous trade and how much you can recover in one or a few trades. In this case, your plan is kept aside as you try to grab as much as you can to compensate what you have lost. To be a successful trader, you need to stick to the plan even when you keep making losses because bigger winnings are always around the corner.

6. Opening too many CFD positions

This happens a lot especially when a trader is looking for a provider that is offering the lowest margin. What happens, in the end, is that you use up all your capital without a single profit.Ignoring the risk in the trade

7. Ignoring the risk in the trade

Many traders concentrate on the profits they are likely to gain without thinking about how much they can end up losing in a trade. In most cases, traders will place a trade where they are likely to gain lower than what they could lose. If you do this for most of your trades, you end up losing all the money in your account.

 

Everyone makes mistakes, even a trader who has been trading for years. However, being aware of some of the common mistakes that may leave you counting losses can help you make better decisions once you start trading.