Common Credit Mistakes to Avoid | TheWealthIncreaser.com

Learn about common credit mistakes that many make, and you need to avoid…

Over the years TheWealthIncreaser.com has presented many topics on credit and yet many continue to utilize their credit in disadvantageous ways.

In this discussion TheWealthIncreaser.com will illustrate 5 of the more common credit mistakes that many have made while managing their credit so that you can avoid them altogether or take steps to mitigate or manage the effects that many are or possibly could have on your wealth building future.

In the following paragraphs you will learn about common and often costly mistakes that “you need to avoid” as you manage your credit so that you can start or continue on your wealth building journey where a bountiful harvest and not overbearing debt is the end result.

Overextending on their credit usage (not using leverage in a way that is more advantageous to them)

Getting Overburdened with debt (trying to inappropriately live off of credit)

Not proactively having mastery over credit (not knowing the makeup of credit and how the credit industry operates)

Not having a timely payoff plan in place (a written payoff plan with a time limit for completion is a must)

Relying on others to correct their credit predicament (by utilizing outside sources those sources may be working against your best interests and in many cases, you won’t even know it)

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Overextending on their credit usage (not using leverage in a way that is more advantageous to them)

Many consumers inappropriately utilize credit, and in the current economy (January 2025) credit usage is increasing to an insurmountable level due in large part to rising prices on needed products and services and income that is not keeping up with those rising prices in many instances.

When utilizing credit, you want to do so in an advantageous way by borrowing at low or zero percent interest, using leverage to purchase assets that “increase” in value, and have a payoff or paydown plan on the front-end–so that you won’t suffer on the back end! In many instances you may want to avoid the use of credit and purchase with current income and in some cases your savings.

Getting Overburdened with debt (trying to inappropriately live off of credit)

If you are utilizing credit as part of supporting your living conditions and you don’t adequately understand credit and how to use it for your benefit, you could get to a point in which climbing out becomes extremely difficult or in some cases unattainable (you will have to give bankruptcy or other disadvantageous options serious consideration).

You want to proactively analyze your credit usage when possible. If you have already run up debt to a high level, you want to analyze your inflows and outflows of cash into your household on a monthly basis so that you can come up with an effective payoff or paydown plan.

Not proactively having mastery over credit (not knowing the makeup of credit and how the credit industry operates)

You must know how to “effectively” manage your credit and that includes knowing the factors that affect your credit, the credit bureaus that review your credit and the credit scoring companies and how they all operate–whether it be for your benefit or to your detriment.

By doing so you gain the knowledge that is needed to manage your credit from a position of strength as opposed to weakness (like many consumers who have no clue about credit often do) and avoid costly mistakes. You also put yourself in a better position to use leverage to your advantage–not creditors and others who do not have your best interest in mind.

Not having a timely payoff plan in place (a written payoff or paydown plan with a time limit for completion is a must)

If you find yourself in debt at this time you want to come up with an effective payoff plan at the earliest time possible or determine if filing bankruptcy or pursuing other options are a better choice.

If the filing of bankruptcy is necessary, you want to do so prior to depleting your assets and particularly your retirement accounts as they are often protected from creditors. However, once you withdraw the funds or borrow against those retirement funds–they are then fair game for creditors in many instances.

Relying on others to correct their credit predicament (by utilizing outside sources those sources may be working against your best interests and in many cases, you won’t even know it)

Ideally you want to gain mastery of your credit on the front-end (prior to making costly mistakes) as by doing so you put yourself in position to make the right or smart moves as it relates to credit and therefore avoid getting into a position where credit management becomes difficult or overbearing.

In almost all cases credit repair, debt settlement, debt consolidation companies, bankruptcy attorneys, payday lenders, car lenders, mortgage lenders, personal loan lenders and the like are working to improve their bottom line at your expense–because they know in the majority of instances consumers lack the needed knowledge to make effective credit decisions that serve their own best interest.

Don’t let that be you if you can avoid it!

If you rely on others, you want to at least get several opinions and not jump on the first option that appears reasonable, but in reality, may not be.

Conclusion

In these difficult economic times, it can often be difficult to survive or live at a certain level of comfort without utilizing credit at some level. However, you want to have an understanding of credit at the earliest time possible so that you can make the right or smart moves at the right time.

Unless you are among the few who have no need to borrow in the current economy, you are in a better position than most, however it is still to your advantage to understand credit at your highest level as you may have a need to utilize credit at some point in your life (you can use leverage (borrowing) to possibly increase your net worth even more!

If you at this time find yourself “saddled with debt” you may have to look at various options and choose from among the best!

Utilizing bankruptcy attorneys and other financial professionals may be necessary, however in most cases you want to get several opinions as well as looking at payoff or paydown options that may work for you and your situation that you may be able to come up with yourself as a result of visiting this post and other posts on the subject matter.

All the best to your credit success and avoiding common credit mistakes that can prevent your finances from becoming a mess…

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