When we set financial goals, its important to manage credit responsibly. Our financial behavior affects it and could be beneficial or create problems too.
Here are top tips to help you manage your credit:
Building credit carefully:
Initially build positive score by getting a card with lower credit limit. Each month, make small purchases and pay the bill off at end of each month.
Pay on time:
FICO and VantageScore, the two major credit scoring companies advice is to pay on time. Set up automatic reminders for bills. Even schedule reminders so that you could transfer payments to creditors before the due date. A history of paying on time makes it a positive score and doing the opposite has negative impact on one’s score. So, its vital to not miss any payments which builds strong credit history.
Know how much you owe:
Another key is to be informed. Study your credit reports, which has your score. Its available free on yearly basis on government endorsed websites and agencies such as Equifax, Experian and TransUnion. Some card issuers offer this score on request, anytime and that is really beneficial. Always see how you could improve this score in each quarter.
Limit overuse:
Top financial advisors including FICO, DebtConsolidation.com advice credit utilization to minimum. They recommend using only 30 percent of the limit. A score is between 300-850 and it shows the lenders how likely you are to pay back the money. Any number above 720 is considered excellent so do keep maintaining a good score in that range.
Rectify errors or credit damage:
When you are reading your mid-term report, it may sometimes show that the bills haven’t been paid although they are. Its important to rectify these errors in time. There could be stolen information and a report generated in your name, so immediate actions are must in these cases. It takes time, effort and multiple follow ups to get it sorted but neglecting it will reduce your credit score and a bane on long term.
Make extra payments to reduce outstanding balance:
This is especially important when paying off your mortgages. Even 25 bucks each month, could substantially reduce your interest payment on loans and save you thousands in the life loan amount.
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Credit Counseling:
DebtConsolidation.com helped me better understand my financial situation. The have easy graphs and is super informative and resourceful. It has all the tools to consolidate your debts and repair your credit. If you are looking for real ways to get out of debt, manage your credit, I highly recommend checking it out.
Monthly budget and debt list:
Having a monthly spending budget is very helpful if you already are in debt. Analyse how you spend your money and what items. Spending huge on non-essential items while already owing in credit could cause serious problems.
Having a Debt List is useful in prioritizing what to pay off first and cancelling it off the list. This is by far the most used tip that any advisor gives.
Do share in comments about how you manage your debt and whats been useful to you1
