Potential for Debt

A number of people have found that they have been turned down for a loan or something else requiring a credit check not because they have too much debt or a bad credit score, but because they have too much potential for debt. Too much potential for debt means, usually, that an individual has too many credit cards.

The potential for debt can be a problem because it shows that there may come a time when an individual has too much debt racked up on a credit card and can’t repay his or her loan. Even if the person applying for the loan doesn’t owe a penny on any of his or her credit cards, the potential for debt is still there. The problem is that each credit card will allow a spender to incur a set amount of debt on the card.

If a person has 50 credit cards and they each have a $10,000 limit on them, that person has the potential to have $500,000 in debt on credit cards alone. Most people don’t have 50 credit cards, but it is easy to see how a bank might be wary of a person who has a lot of cards. Because of this, it is recommended that a person not have a lot of credit cards. If the person already has a lot of cards, it is important to keep the limit low and not leave a balance at the end of a month.

Contact a Boston Bankruptcy Lawyer

If you are swamped in credit card debt and do not see a way out and so are looking at bankruptcy as the solution, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346.