For some people debts are inevitable. Without taking credit it would be impossible for several people to get the things they need, like a house, a car or higher education.

Some people would not even be able to pay their bills if not for credit cards. In the second quarter of 2018, household debt and credit was around $13 trillion according to a report released by the Federal Bank of New York.

There is a huge amount of information available out there about credit score and credit repair. But the people who are neck deep in debt do not eventually manage to pay back the money because they do not take any step towards reducing debt and saving enough money. Why? The following are a few reasons:

No budget

Every person regardless of their job or status should have a proper budget for income and expenditure. Unfortunately, most people who are in debt never had any such budget. The situation does not change even after the debts keep accumulating.

Despite the abundance of information out there on credit repair, without a fixed budget no professional service can help a person out of debt. Creating a monthly budget requires a bit of practice.

For someone who has never stuck to a budget, it is indeed difficult to restrict their spending. But without a budget expenditure will always continue to exceed the income, and contribute to the amount of debt.

Spending beyond means

Even if you manage to fix credit score, it won’t be that way for too long if you keep spending beyond your means. That’s what happens with most people who are in debt.

Spending beyond means is often because of putting up appearances. In every culture, there is a certain status symbol associated with being rich and successful.

Even those who cannot afford that kind of lifestyle put up appearances in order to show off to others. At the end of the day, spending more than what you earn in order to fit a certain lifestyle will only lead to more debt.

Financial illiteracy

Several people have no idea how credit works. They don’t know what credit score actually means, or how to increase credit score or how late payments affect their FICO score. This type of financial illiteracy not only contributes to debt accumulation but also makes it impossible to be debt free.

Therefore, the first step to take to improve FICO score is to get more knowledgeable about how finances work.