Helpful Tips and Tricks to Achieving and Maintaining Good Credit

Helpful Tips and Tricks to Achieving and Maintaining Good Credit 

Your credit score can go a long way in meeting your financial goals. The score starts ticking the moment you take out a loan or a credit card. How you keep it in control so that it does not affect your credit score is vital to your financial health. These tips will help you maintain good credit.

Track Your Spending

The first and foremost rule of good financial health is to track how much you are spending. It means following the usage of your credit cards, ATM cards and even cash spending. This will help you identify if you are spending more than you should. If you are, then cut back on some expenses. 

Know Your Limit

It is vital to establish some spending rules so that you are in control of your finances. One useful tool is the 20/10 rule. It suggests that you should keep your total debt at no more than 20 percent of your annual income. Also, your monthly debt repayment should not be more than 10 percent of your monthly income.

Have Some Emergency Cash

While credit cards may seem like the ultimate solution to all your financial needs, they are not. It is advisable to have an emergency fund in cash or a savings account that you can rely on in case of an emergency. When you are not earning, rather than relying on your credit card, you can use this fund. It helps make sure that your debt does not mount.

Understand Debt

Debt has a way of multiplying and can get out of control very fast if you are not careful. So, know what your monthly payments are, the interest rate, the minimum amount and the due date. 

Use Your Credit Line Optimally

Your credit card might have a huge limit, but you don’t need to use it all. Try to keep the credit usage to below 30 percent of the overall limit. It suggests that you are not wholly dependent on credit and will add positive points toward your credit score.

Pay At Least The Minimum Payment

This is simple. The more you repay, the lesser your debt burden. But, for some reason, if you are short on cash for a month or two, pay at least the minimum payment. It will ensure you don’t have any extra charges inflating your debt. If you skip payments, it reflects poorly on your credit score.

Pay On Time

This is another point to bear in mind. Your credit score not only reflects how much you owe but how good you are at repaying what you owe. So, maintaining a good payment record will help you get lower interest rates on your future debt.

Automatic Payments Can Be Your Savior

Given the busy schedule that you have, you may forget to pay a bill or two. Don’t let this forgetfulness tarnish your credit score. Sign up for automatic payments. It means that your bank will make the payments every month automatically. 

A good credit score can save you a lot of money and heartache. So, use these tips, you make sure that you are in control of your finances.