6 Hacks to Keep Your Credit Score High

By on September 28th, 2016

high credit report
Photo Credit: Pixabay.com

With your first credit, no matter if it’s a credit card or a new home, you need to learn how to take all your finance under control. It’s a basic skill you need to gain not to get into debts. When you take out a loan, it’s necessary to understand that your monthly payments will be added to your regular expenses, so you need to consider the size of a loan. Such basic rules of debt management are important before applying for a loan. So, make sure you follow the next tips and your finance will be out of danger.

Control Spending

It can happen to be a difficult task for beginning, as you need to track all checks, credit, and debit transactions, as well as ATM card usage. But you will understand the importance of this step in the end of the month. It will be much easier to notice any inconsistency when you check everything on time.

Do Not Exceed the Limits

When using a credit card it’s highly important to keep your spending below the available credit. This can simply be calculated by the amount of money left after subtraction of your outstanding balance from a credit limit. There is also the “20/10 Rule,” that recommends not to make your credit card debt exceed 20% of your after tax income. And it’s 10% for your regular take-home pay in credit payments. Surely, if you plan to purchase a car or something even more costly, you will have to rethink your strategy.

Create Your Emergency Fund

It’s a good practice to save up to six months’ living spending making an emergency fund. This money will be much useful in case of any unplanned expenses or job loss. In such way, you will be able to avoid a necessity to borrow money and make your debts only bigger.

Cover Your Debts

Even if you don’t have money to repay all the debts at once, it’s essential to make the minimal payments each month. This won’t let you be buried under debts and keep your score on an appropriate level. If you can, it’s better to cover the full balance, so you will be able to be free of debts soon. For example, you can read how to choose your car loan considering your monthly payment ability.

Pay Attention to Time

The other important point is to make all the payments on time. It’s helpful to organize your paying process and put all the bills in one place. Make a schedule of necessary payments, or you can even choose one day to make all the payments at once. You can negotiate your credit card issuer to change the due dates of your payments. This is much convenient for better organization. In case you fail to cover some debt, it’s always necessary to contact your lenders and notify about possible late payments. This will help you to avoid extra charges.

Automate the Process

For many people, it’s very convenient to use automatic systems to make payments on time. You can schedule all necessary bills, so the only thing to control is to have enough funds to be debited from your balance.

These recommendations are a simple way to manage your finance and keep it on a good level. When you spend a month following all these steps, you will see that there are no difficulties to control your expenses and debts. Also, it’s important to stay in touch with your lenders to notify of any possible problems or late payments. Such attitude will help you save your money and keep your credit score high.