Your credit
is used by banks, mortgage lenders, and even phone companies to evaluate how much
of a risk you pose. Therefore, it's crucial to maintain a good credit rating or
you could end up paying higher fees and interest rates - or not even get approved
for a loan at all. Here are several ways
to maintain good credit: 1.) Pay your
bills on time and always pay at least the minimum monthly payment. If possible,
pay more than the minimum amount! Remember, the longer it takes to pay off your
debt, the more interest you end up paying.
2.) Avoid applying for
new, unsolicited credit cards that come through the mail. The "pre-approved"
stamp or 0% intro APR might be tempting, but overextending your credit will not
help your credit score.
3.) Do not
ignore overdue bills. If you're having trouble making payments, many creditors
are flexible. Contact your creditor to work out a new payment plan if possible.
4.) Try to keep your credit card debt as low as possible. If you constantly
approach your credit limit, lenders who examine your credit report will see this
negatively.
5.) Limit your applications for new credit. Since
regular requests for your credit report can be seen as negative by potential lenders,
only apply for credit when it is absolutely necessary.
6.) Maintain
consistency! A long history of good credit is generally favored by creditors.
If you maintain a good reputation, they will be more likely to approve your loans.
Keep in mind, your credit rating is dependent
on many factors and may be vary between the various credit bureaus. Some will
look only at the information on your credit report, while others will consider
personal and demographic aspects such as your income, age, savings, and marital
status. Managing your "needs"
vs. "wants": To maintain a
healthy credit rating, it's crucial that you handle your credit cards and other
debit in a responsible manner. Spending more than what you make is easy to do
if you rely on your credit card to pay for things you don't need. Take
the time to establish a monthly budget and differentiate between items you "need"
and the items you "want." Start by taking your fixed expenses or "needs"-like
rent, food, utility bills, phone bills, car loans, and insurance payments, and
subtracting your variable expenses or "wants" like clothing, eating out, and entertainment.
If the sum is below zero, it's time to reduce your expenses by cutting out any
unnecessary spending on "wants." Most of
the time, cutting your expenses is the first step towards paying off your debts.
Here are some tips to help you out: - Use
Credit Cards Wisely: Pay on time and pay at least the minimum due each month.
Be aware of finance charges and annual fees. If you can pay more, you should!
- Avoid Impulse Buys:
Do you really need that magazine, those new shoes or that designer shirt? You
can save a ton of money by adopting more disciplined spending habits.
- Learn to Cook: It's much cheaper
to eat at home vs. going out. The difference in cost between a week of eating
at restaurants and a week of groceries will send you running to the supermarket.
- Buy in Bulk: You'll
always need toothpaste, toilet paper and cereal, right? You might as well save
some money by buying in bulk.
- Clip
Coupons, Watch for Sales and Shop at Outlets: Shop for the best prices and
save whenever you can. Many grocery stores double your coupons on specific days.
It may only be 30 cents here or a couple of bucks there, but over a year, it all
adds up. If you can't cut your addiction to designer labels, try outlet stores.
- Ways to Lower Education Costs:
If you're a college student, look for off-hour courses. Some colleges set lower
rates for evening, weekend and summer courses. Some schools give tuition discounts
to students who persuade other students to enroll. Dorm supervisors may get free
room and board. Some schools reward students who maintain a straight four-year
graduation schedule. A little research may result in substantial savings.
- Keep Track of ATM Usage:
If you use an ATM that is not operated by your bank, the bank that owns the machine
may charge a transaction fee ranging on average from 50 cents to $3.00. If you
only make one withdrawal a month, this may not be much of a problem. However,
several small withdrawals will add up.
These
are just a few tips. A group called the Consumer Literacy Consortium has a pamphlet
titled 66 Ways
to Save Money with some more great tips!
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