The process of becoming creditworthy is a pursuit that affects a person’s entire life. If your credit score is good, then you just need to focus on not ruining it. If it’s not good, you could be in for some serious work. However, a bad credit score rating is not a death sentence, it can always be turned around. The more you put off working on your credit score, the more you will fall deeper and deeper in debt. If your debt is holding you back, now is the time to stop digging and rather find a way out instead. Make sure that you have full control of the money in your account. This will ensure that you are able to pay your expenses and still live a quality life. Let’s explore how you can eliminate financial woes and become creditworthy.
Avoid stacks of unpaid bills
Whether it’s for your bond, your car loan, your credit card bill, or any other critical bills that could make an impact on your credit rating, be sure that you stay up to date with your payments. Keep in mind that 35% of your credit score largely depends on your payment history. Nowadays, there is an app for just about everything. Top Best Alternatives recommends some useful apps that remind you to pay your bills on their allocated dates.
Budget your money and avoid using a credit card
Just because the bank tells you that you are eligible for a large loan, does not mean that you should take them up on their offer (unless it is absolutely necessary). Try to see your credit card as a piece of plastic that constantly needs to be paid. It is not a ticket that allows you to go on an elaborate and expensive shopping spree. Make sure that you keep your credit card debt as low as possible. In doing so, you will be able to settle any debt your credit card may have. Remember that your debt-to-available-credit ratio accounts for a staggering 30% of your credit score. A good way to avoid using your credit card is by setting a realistic budget and sticking to it. GottaBe Mobile suggests some innovative apps that allow you to draft up budgets tailored to your specific expenses.
Myth: Close old and unused credit accounts
Many consumers feel that they need to close unused or paid off accounts. However, that can do more harm than good. It can shorten the length of your credit history, which makes for 15% of your overall score. You want to have the longest possible credit history as this will make you more creditworthy to creditors.
If it is too good to be true, it probably is
We see tons of deals that seem to be value for money, however, we fail to read the fine print or ask probing questions. We get far too distracted by their call to action, such as ‘best deal’ or ‘30% off’, that we immediately fall prey to buying things we don’t necessarily need. New credit applications could influence 10% of your score. If your finances are not handled properly, you could end up swimming in all that debt, surrounded by all of your useless gadgets and gizmos.
Don’t get consumed by debt – consult a debt counsellor
If you have already fallen behind on your payments and there’s little chance of getting your accounts current anytime soon, consult a reliable credit counselling agency. Alternately, you can also approach your creditors directly and explain your situation. The key is to open up your eyes to your debt problems and actually take action. The longer you leave it, the worse it will become. Most banks or other financial institutions are willing to make a lighter payment plan that can make your expenses a little bit more bearable at the end of each month. Take the first step when you feel like your finances have spun out of control. Reach out for professional help. Fin24 unpacks the ins and outs of credit counselling to clear up any misconceptions people may have about debt counsellors.
Stay on top of your finances by staying well informed
Even though you may now be well informed about how to handle your finances – not everyone else is. You need to constantly make sure that no one drags you or your business down due to their debt. If you suspect that a potential consumer is not going to live up to their word, let MarisIT do a Consumer Report on them. It will provide you with extensive information about the consumer credit rating of the specific individual. You will be able to see if the consumer really can’t repay on a financial agreement.