One way of knowing that you have a bad credit record is when you apply for a loan and it would just simply be declined. This means you cannot be trusted by the lending company to pay what you borrowed. Having this reputation may come to you in any way, be it accidental or intended.
Here are some examples of people I know are now in serious debt with their card issuers. A friend of mine bought a car using his credit card but before he could make his first payment, he lost his job. The company just shut down its operations quite suddenly, without prior notice whatsoever. He lived through his credit card until he could find another job. His credit then became too much that repairing it was virtually impossible. He never saw this coming.
Another friend of mine ordered a VISA card from another company that offers this to those with bad credits. The first time he was late in paying his dues, he was charged a lot of fees. And what is worse is that he was also beyond his credit limit, which resulted to more fees. Again, he never saw this coming.
My advice to those who think that they are so far down the pit that they cannot see any light is to simply stop using the card or cards. Focus on paying the debts on one card and, if you have more than one card, pay the minimum of the other. Pay your debts one at a time.
For you to restore your credit, you will need a copy of your credit report and plan your steps. You cannot consider eliminating your credit cards as one of your options because this would just worsen your status and credit rating. What you can do is apply for bad credit credit cards and use them wisely. You must understand that it is not entirely within the credit card issuer’s grasp to manage your debts. It must work both ways, from the user to the issuer and vice versa.
Basically, this is what separates people who can and cannot afford to have a credit card. For you to become productive with your credit card, you must think of what you have first over your wants and desires. In cases of those who have credit cards for people with bad credit, it may be wise to give your card to someone who you trust and let him give you the card when it is really necessary. You can stop making purchases through your card but you must remember that credit cards can be used to save money as well, if you maintain discipline.
It may be difficult to restore bad credit but you do not need to hide from your collectors. Instead, you must communicate with them and ask them what you can do. Live on a budget and have some savings from your paycheck. If you are really trying to be credit-free, there will come a time when this will happen. Just remember to keep track of your purchases and stick to your budget.