The American financial system has changed dramatically since the economic markets first took a hit in 2007, resulting in a tightening of consumer credit and lending in what has become known as the credit crunch.

With millions of workers being laid off since that time, many began having a difficult time keeping up with their payments and eventually defaulted on their personal loans and other lines of credit. Because lenders were no longer profitable on the loans they had been making before the credit crunch, they were forced to ration the amount of credit given and to raise interest rates on nearly every type of loan.

As this happened a new type of trend emerged in the world of personal loans: the microloan.

A microloan is a loan given to either an individual or small company that has a high likelihood of being repaid. This type of loan has much shorter payback terms than other types of loans, and is also for a lesser amount of money.

By making smaller loans over shorter periods of time, lenders are better able to manage risk and ensure that they earn a profit (no matter how small) for their efforts. These types of loans help the consumer bridge gaps in their pay periods, pay for unexpected emergencies, or otherwise keep them cash-flow positive when times are tough.

Though the world economy is now recovering from the credit crunch, the trend towards microloans is likely here to stay.

It all started so innocently. You took out a short-term loan one December to help you meet all your gift-giving obligations, but when the payment came due, you had to take out another loan to cover it. Then a year later, with that loan still in the process of being paid, you had to take out a credit card to get the new clothes you needed for a new job. Then, on your way to your first day of work, the car you’d owned for years broke down, so you took out an auto loan to pay for a new one. The economy turned sour, you got your hours cut at work, and you’re now struggling to keep up with all your payments.

As a result, your credit score went downhill, and you’re now unable to refinance your loans or transfer your credit card balance for better terms elsewhere, which continue to bring your credit score even lower.

Welcome to the debt cycle, where your debt levels drive your credit score downward, and the resulting low credit score hinders your ability to refinance your debt.

If this situation sounds familiar, you are not alone. Millions of Americans make just enough to barely keep up with their bills, and many are not even that fortunate. While this cycle of debt and credit may seem impossible to escape, there are some simple principles to follow that can help you do just that.

1. Keep Paying Your Payments

It is very tempting to just stop making payments on your debt and to allow whatever will happen, to happen. This is the last approach you want to take, as it will wreak havoc on your life financially for years. Your credit will be destroyed, and you will find it very difficult (or even impossible) to find any type of financing when you need it.

Making on-time payments on your debt needs to be your top financial priority. Doing so will maintain or even improve your credit rating as payments get reported to your profile, while also reducing the amount of debt you owe. Combine those two factors, and what do you get? A higher credit score and, thus, more financial options. With a better credit score, you can seek a debt consolidation loan, or a 0% balance transfer credit card, that will lower your monthly payments and help lift you out of the debt cycle.

2. The End Goal: To Pay Off Debt

By now you probably learned your lesson: merely staying afloat in an ocean of debt is not a desirable option. It should be your goal to ultimately pay off your entire balances. Doing so will not only help improve your credit rating, but just imagine all the freed-up money you’d have to spend on other things. No more loan payments? Credit card payments? Mortgage payments? Imagine the possibilities.

Additionally, by paying off your existing debts, you make yourself more attractive for other lenders and creditors to approve you for other forms of financing. If you’ve always wanted a bigger house, you may be able to get financing for it if you can show that you’ve strived to pay on time and that you’ve paid off your past debts. If you would like a loan to start a new business, small business lenders will likely want to look at how you’ve paid on your personal debts. Simply put, paying off your debt opens a world of options to you.

3. If You Need Help, Ask for It

There is no shame in seeking the help and counsel of a trusted professional in breaking the debt cycle. That’s what they are there for. If you find yourself unable to keep up with your payments, or you see no end in sight for your debt struggles, there are many qualified companies that specialize in sorting through such issues.

If you decide to seek help, be sure to put in the effort to find a reputable service that can show a track record of results. After all, escaping the debt cycle is well worth the extra effort.