How Do I Manage My Credit?
When it comes to wise financial intelligence, managing credit should come naturally
. However, according to a Credit.com survey, fully 50% of people with a credit report have never read it or had not followed up with it for over a year.
A credit report is considered one of the essentials of financial intelligence. In order to be a responsible consumer of credit, you need to know where your money goes.
Having a credit report helps the consumer understand where you fit into the credit system. Being unaware of your credit report may give you surprises. Lacking this information, you may be denied when you apply for credit or be asked to pay at a higher interest to cover the bank's risk.
Furthermore, by dutifully and constantly checking your credit report, you can spot credit discrepancies and catch identity theft more quickly.
Here are 5 ways you can easily manage your credit:
Tip 1: Use only a miniscule amount of your available credit
Banks are a fussy and fidgety bunch. So the more of their credit you are using, the more attention some of your creditors are giving you. Keep your spend below 10% of your available credit. Normally, spends above 35% waves a red flag in the bank.
If you habitually or often find yourself maxing out your card, better find a way to fix it as soon as possible. The longer and often you stay near your credit limit, your score is much lower.
Tip 2: Constantly use online banking tools and reports to monitor your account
A consumer that constantly checks his credit statement is rarely surprised. Identity thieves thrive on lazy people who couldn't be bothered to read their statement and check their spending line by line. Probably because it's too disturbing to read all the non-necessities you bought at a high interest rate!
If you're getting too close to the credit limit on any credit card account or too close to zero in your bank account, how about opening a bank account where you absolutely do not touch the money. Call it your financial freedom fund, if you will.
To make it work, make sure you put in 10% of your salary in that new account first before anything else. Then if you can't stand it, spend the rest. But it would be wise advice you start planning on paying off all your debts first.
Tip 3: Open and carefully read your credit card email statements
Make it a discipline. Make sure you open every email you receive about your credit card and read it, especially and most importantly, the fine print.
It's in the law that when a bank or credit card company changes or charges your account, they must tell you in advance. It's up to you to be aware of those changes because it can cost you if you claim ignorance about them.
Tip 4: Treat your credit portfolio like an investment portfolio
Treat your credit limit like an investment portfolio. If your credit risk is good, the less interest you have to pay to cover the perceived risk the banks are taking to trust you with their money.
Tip 5: Remember that credit affects and impacts every aspect of your life
Getting credit is a two-edged sword. Mismanage it and it will turn you into a pauper. Use it well ans it will enhance your quality of life. In the modern world, credit is all around. You need it to buy a house or car, apply for student loans or book a hotel. In one way or another, all of these things are impacted by credit. Furthermore, your insurance rates are impacted by your credit report.
With better credit, you pay less for a variety of premiums. Insurance, loans, etc. The higher your credit score, the more you considered a trustworthy credit consumer.
by: Huey Harden
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