Taking out loans occasionally is not a bad thing. Maybe you’ve had an emergency that required a large amount of extra cash right away, so you went to a few reliable money lenders to get a loan.
It can get bad, though, if you start to become loan-hungry. In other words, you find yourself taking on more and more loans than you can keep up with. Here are five signs of this to watch out for.
Your credit score keeps decreasing
If you want to take good care of your financial health, one key thing to watch out for is your credit score. All Singapore citizens have a credit rating that ranges from 1,000 to 2,000. You can find out yours by requesting a credit report from Credit Bureau Singapore. This costs S$8, excluding Goods and Services Tax (GST).
As a rule of thumb, a credit rating of 1,723 or lower is a bad score. In turn, banks and lenders are less likely to approve your loan applications. It will be much harder for you to borrow money with a bad credit score.
You have dealt with loan sharks
One of the dangers of a low credit score is if you become desperate, you may be tempted to go to loan sharks instead of legitimate lenders. Loan sharks are unregulated and predatory, so they will cause you more harm than good. Never trust loan sharks to help you out of a tough financial situation.
You take on too many loans at once
Dealing with multiple loans at once is often a troublesome matter. This includes holding several credit cards. Your income may not be enough to pay down all of your loans, causing delinquency. In other words, you may often be late in repaying your monthly dues. Even worse is you may miss payments on some loans.
Delinquency is always bad news for your financial health. It is one of the things that will drive your credit score down.
You constantly get notices from collectors
If you have a history of delinquent debts, collection agencies may constantly badger you with calls, emails, SMS, and letters in the mail. If you find that this happens more often, it’s a bad sign. Your debts may already be spiralling out of control.
You use more and more of your income to pay down debts
If you find that your income is becoming insufficient to pay down your debts, it’s another clear sign. If it’s becoming harder for you to afford repaying your loans, it means you are in excessive debt. This may even result in you going bankrupt if you don’t deal with it promptly.
Conclusion
Becoming loan-hungry is always bad news for your financial health. Watch out for the five signs above, and seek out ways to deal with your debt problems when you experience them. Getting out of debt can be challenging, but it isn’t impossible. Make it a priority to get your finances in order, and you will eventually be free of debt.
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