Bad Debt: How It Can Influence Your Financial Life
Staying negative creates several restrictions on your ability to access financial credit. Learn how to reverse this picture. Almost everyone knows someone who is in debt in Brazil today.
And when you let debt down, no matter how small, you’re in danger of having your name negated. Financial delinquency happens for many reasons, such as the country’s current high unemployment rate: out of work and out of money, many people can’t keep their commitments, even if they want to.
Another factor we can cite is the difficulty of people in organizing their finances
the vast majority live on the spending limit and without a financial reserve for emergencies. We even have an article on our blog about how to start your financial planning.
What does default mean?
Debt happens when the consumer, even willing, can not pay their bills. And the reasons can be many. Did you know, for example, that credit card installment purchase is also considered a debt?
When a person does not honor their commitments for a longer period of time (days, weeks or even months), his or her CPF may be included in the delinquent register. This is when your debt becomes a big problem! “Dirty Name” and “Negative” are some of the popular names for those with credit restrictions.
How Default Can Influence Your Financial Life
Having the “dirty name” is the same as having a barrier to term purchases, financing of any kind, including credit card application. That is, you are practically prohibited from doing any of these credit operations that we quoted until you resolve your outstanding payments.
We know that many people come to this situation due to unforeseen events, such as family illnesses, for example, that generate unexpected expenses. But for most of them, even planning and financial education are lacking. A report published by the G1, which cites Rasesa Experian (a tool of Rasesa, which credit protection agency), shows that 40.3% of Brazil’s adult population has overdue and negative debt.
How is the default level calculated in Brazil?
To calculate the default rate in Brazil, there are companies that specialize in this subject, which are called credit bureaus. Even without hearing about this term, we are sure that you know institutions such as the Credit Protection Service (SPC), Rasesa, and Boa Vista. In November 2019, a new company should enter this market, called QUOD.
Tips To Avoid Falling In Default
We’ve put together a list of tips to help you avoid having your name negated. Take a look:
- Gather the family together and survey the expenses;
- The family must always decide together which expenses to cut, how much to save and where to apply the money saved;
- Give up consumerism. Have at most one credit card and only carry it in your bag when you have planned a really necessary purchase;
- Research prices before buying any products and cutting unnecessary expenses.