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Too often than not, people with poor credit end up doing things to try and get their finances back in order that ultimately makes their credit worse.

Applying for a credit card with bad credit
A credit card is one of the best means of rebuilding credit. However, credit cards also open new doors for damaging credit. Suppose you apply for an unsecured card with a $500 credit limit. Being that the limit is only $500, you are confident that you will always be able to repay the balance, even when the credit limit is met. Unfortunately, unforeseen issues often arise, and you miss a payment. As a result, you are hit with a late fee, which puts you over the limit. Therefore, you are also hit with an over-the-limit fee. These penalties end up being a total of $100. So, instead of having a $500 balance, you now have a $600 balance. That's a 20% increase added to your balance! If you miss another payment, you are going to be hit with more fees! Your $500 limit can easily end up costing you hundreds, if not thousands more!  Also, your late payments and over extension of your credit is going to hurt your credit rating, making your bad credit worse.

People with bad credit are going to have a hard time paying any extra fees or charges. Even though unsecured cards with low limits are great for rebuilding credit, they can also damage your credit if you do not use credit cards wisely.

Another example of when credit cards get people with bad credit into trouble is when they keep applying for credit cards so that they can pay off other credit cards that are maxed out, over extended or are delinquent. This is a revolving cycle, resulting in consumers really putting themselves in over their heads in credit card debt. The interest rates of the newer credit cards are going to be sky high as a result of their poor credit card usage.

The bottom line is, don't use a credit card if you don't intend on using it properly. Abusing even one credit card is going to make you vulnerable to all sorts of potential credit and money issues.

Applying for payday loans with bad credit
Not only are the interest rates associated with payday loans ridiculously high, payday loans have some pretty harsh penalties associated with them for not making payments on time. Suppose you obtain a payday loan for $1,500 but fail to repay the loan on time. You are definitely going to be hit with late fees up to $100! So instead of owing $1,500, you now owe $1,600! You will be hit with the same type of fee for every week that you neglect to pay your loan balance. That's right, $100/week! Its easy to imagine how fast that total can increase and how long it will take to pay off the loan. It is also very common for people that are having problems paying off a payday loan to apply for another payday loan to pay off the first one. Seems like a sensible solution. However, if you can't pay the first loan, what makes you think you will be able to pay the second one? Bottom line, these are one of several types of loans to be avoided.

In conclusion....
Juggling debt is not the answer for recovering from bad credit. You will only end up further damaging your credit score. You can learn how to develop a financial plan for eliminating your debt and developing strong credit.



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