In case you’ve recently repaid a credit card balance or a mortgage which you had been bearing for several years, you must be thinking of taking out yet another loan. Loan lending companies like Northcash report that there are several borrowers who visit them to borrow loans soon after they’ve repaid some previous loan amount. As per new statistics, it is seen that in spite of having several reservations, consumers are still taking out new loans.
As per the Federal Reserve Bank of New York, Americans ended the last quarter of 2017 owing more debt than ever in the past. Among them consumers owed $140 billion in the form of mortgage debt, along with $8 billion in car loans and $28 billion on credit card balances. So, what are the mistakes that most people commit soon after they get out of debt? Check them out.
#1: Sliding back into debt
There are many who again fall back in debt as they feel deprived after remaining without credit for so many years. People who have just pulled themselves out of debt also wish to build and improve their credit score by using their credit cards in a responsible manner. Though you can certainly use a credit card, there are many among them who love to examine and test their spending behaviors which brought them into debt. In fact, there are clients who call for another debt elimination program soon after they completed one. Hence, they keep diving deeper into debt.
#2: Closing down your credit card accounts
Once you drag yourself out of debt, you may think that the most sensible option is to get rid of your credit cards, particularly when you’ve triggered substantial debt amount. But there are some points when you wish to purchase a home or a car or you want to take out a loan. In order to get good and reasonable terms on your loan, you will require good credit and in case you maintain bad credit, the interest rates will be high. It is better not to close the credit card accounts as the lenders are happy to see a long history of borrowing money.
#3: People no longer had financial goals
Most people who pull themselves out of debt usually do so in order to lead a happy financial life in the near future. But they become so casual about their financial life that they forget to set any further financial goal in front of them. Rather than continuing on the path on which they had been moving, they diverge and again start walking on the wrong path. This is how they again fall back into debt.
#4: Never tracking your credit report
There are some consumers who have pulled them out of debt and they don’t plan on taking out a new loan in the near future. This is when they totally forget about checking their credit reports. You have to make sure that you take a look at your credit report once in a year so that you know everything is fine there.
Therefore, now that you know how you can avoid making mistakes once you drag yourself out of debt; don’t ever commit the above listed mistakes as they can again push you into debt.
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