Credit cards make our lives a whole lot easier, we can shop around as much as we like without having to worry about whether or not we have brought enough cash. The problem here is that we can end up having a lot to worry about in the not too distant future, the bills start adding up and we become unable to pay them on time so we get low credit scores.
You may think that having a bad credit history is not all that bad, after all, as long as you have enough cash lying around you can pretty much get by, you’ll just pay for things the old fashioned way from now on. Well we have some news for you – your credit history will be one of the first things a potential employer will look into when performing a background check, right after finding out why and on what terms you parted with your previous employer. Some states in the US have laws that state that checking your credit history without your permission is unconstitutional, but this doesn’t help much – if they do ask your permission and you refuse they will take this as a bad sign. You will also have trouble when applying for loans, as the bank needs to be sure that you are able to pay them back they are going to take every precaution they can before they loan you money – this will include getting information on your annual salary and credit history. The same thing applies when you try to get insurance.
Even if you can somehow get by without loans and you have a steady job, a lot of stores no longer accept cash as payment, and the banks have fines (about 30 dollars) for every charge that comes in while you are in the minus zone, these will add up and you will only become aware of them once you see the bill.
If you owe small amounts of money, your best bet will be to carefully plan how you will spend your budget and set aside funds for specific items, services and daily grocery shopping in advance. This way you can get better insight into what areas can be cut from your budget and which products and services can be downgraded to a more affordable alternative so that you can save enough money to make the payments.
If you have a large amount of credit though, you will need a slightly different approach. You can try getting a credit card with a minimal limit to help get you started on your way to managing your credit scores more efficiently, just make sure you go through credit reviews on a regular basis. The people that issue credit cards will go through your purchasing patterns once a year, and, much like Santa Claus, will reward you if you have been good (if you spend very little from your credit card) by raising your score or punish you by lowering your score if you have been bad (if you keep spending a lot, going further into debt). A good way of raising your credit score is by decreasing your credit risk. You can do this by having several active accounts with available credits. Keeping a couple of active credit cards open simultaneously will also help, just remember not to close an account as soon as a card reaches a zero balance – this can actually lower your credit score.
Finally, you should bare in mind that the FICO score is comprised of these elements: 35% is payment history, 30% is credit utilization, 15% is length of credit history, 10% is types of credit used and the last 10% is recent searches for credit. So by just paying your bills on time and lowering the credit utilization ration will cover 65% of your problem, while a long positive credit history and efficiently managing different types of credit will help further improve your scores.
As you can see, properly managing your credit scores will help you come across as a trustworthy person to both banks and employers and benefit you in the long run. The best thing is that all that it takes is a little planning and common sense, so take our advice and you will reap the benefits.
Useful Tips to Improve Your Credit Score
The credit is very important in the financial realm of the life although lots of people do not understand this simple fact. It will give you a possibility to get bigger loans and accomplishments. It is completely possible to restore your credit score by yourself. These simple tips will help you to solve some issues that may occur while recovery of your credit score.
Try to reduce the number times when you have had the credit inquiries done for you. They will affect your credit score during the following twenty four months. Keep in mind that when you take any loan, you will have to pay back for it. Therefore before taking up any loan or credit, think twice if you are able to pay back for it. If you do not, then do not take a risk as everything influences your credit score.
If you use your credit card, then pay for all your purchases with it. In the end of the day calculate all your expenses and pay them at once. If you cope with this assignment successfully then after some time you may pay not every day but every week instead.
If you are in a habit of paying back for your bills with delays, that is no good. Each missed or unpaid bill is counted and written down in your credit report. pay for all your purchases with it. In the end of the day calculate all your expenses and pay them at once. If you cope with this assignment successfully then after some time you may pay not every day but every week instead.
Another significant point about the recovery of your credit score is the process of closing the credit cards. If the account has the unpaid or missed bills, do not close it as it will turn your credit score into a bad one at once. Still it is quite understandable that if you lack money to pay for the credit card, a question of closing the credit card will arise. Just do not forget of an unpaid bill.
If you have fallen into cracks do not get stressed and disappointed at once, as there is still a solution. Borrowing money with a help of online payday loan lenders will give you an opportunity to get cash quickly and this option is available for people whose credit history is far from perfect. The procedure is very simple, does not require any documentation and takes approximately fifteen minutes of your time. But this way-out will be suitable just for the extreme situations when you are not able to pay for any of your bills and you have got a deadline.
If you have a mortgage to be paid but can’t make a payment in time, then you should contact a creditor and let him/her know that you have a problem. Do not ignore letters and notes from the lender, because that can lead to foreclosure and other unpleasant consequences. Whatever happens, remember that you should act responsibly.
Therefore the main point will be to pay for all the bills in time and do not forget about the deadlines. If you are still unable to pay back, then contact your creditor and tell about your situation. That will show that you really want to repay your loan and take care of your credit.