It’s important to take steps toward improved credit, particularly since bad debt remains on a credit report for up to seven years and a debt buyer stands to make a profit on the debt if they can recoup anything from the consumer.
When making a deal with a debt collector to pay back the debt for less than it originally cost there may be some taxes that you have to pay to the IRS for settling for less.
When bad debt is reported to a credit bureau, it lowers your credit score, but collections agencies have been known to try to use bank levies and wage garnishments in late stage collecting.
Your debt-to-income ratio is your total monthly debt payment divided by your monthly gross income whereas your credit utilization ratio compares the amount you are currently borrowing to how much you could borrow on your credit cards.
Credit cards are often associated with debt and interest, but there are certain advantages to having credit cards if you take the steps to use them right.
