If our country has learned one thing, that one thing would be bad credit will ruin our country. It is obvious that many people are living beyond there affordability. You might ask how in the world did this happen? This happened due to a lack of credit education in our country. It is not required to learn about credit in our public schools. So most don’t have a clue about how important it is to keep good credit scores or how to establish them.

In this article I wanted to discuss the underlying issue of why so much credit is going to collection and the cause.

Credit Education
We all know the old saying “if no one never told me, then I would never know.” This old cliché is so true when it comes to proper credit education. If you are not educated about the importance of keeping good credit, then you may not know how bad credit will affect you. This is the issue at hand, and why so many creditors are asking for help from the federal government. The first step to resolving this gigantic problem is to educate everyone on when to buy on credit. Yes, credit is necessary, but don’t over do it. You might ask what is over doing it? Well, if you charge a dollar amount on a credit card, and you cannot afford to pay it off that next month, you are living beyond your means. It is really that simple. It does not hurt to charge on your credit card, but don’t charge more than you can pay off the following month. Living by this standard will keep you out of trouble with creditors, and help keep your credit rating healthy.

You also need a mix of credit. The current credit scoring system looks at the following to determine your credit score.

Payment History – 35%
Amounts Owed – 30%
Length of Credit History – 15%
Types of Credit in use – 10%
New Credit – 10%

What affect’s your credit?
There are numerous factors that can affect your overall credit. The most important factor is to never be late on your obligations. The most single mistake out there in the world of credit reports is late payments. You can see in the above chart it accounts for 35% of your credit rating. This will destroy your credit, so don’t be late on anything. Also there are rumors out there that medical collections don’t hurt your credit, well they actually hurt your credit just like any other type of collection. Some lenders don’t necessarily look at those types of collections, but those types of collections affect your credit score dramatically. All lenders look at your CREDIT SCORE, so don’t allow anything to go to collection.

Does bad credit go a way?
This is the 1000 dollar question, does bad credit go away? Well I think you know the answer to this, the answer is NO. When you have a collection on your credit report, it will be on there for 7 years or more. Some collections don’t go away until you pay them. Here is an article I wrote about the expiration dates for certain types of collections. Also even though certain types of collections are set to expire after seven years, does not mean it will go away. You will more than likely have to dispute this info with the credit bureaus, especially if you have not settled the debt. All of this can be very frustrating, but necessary if you have credit issues.

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