Personal credit issues can negatively impact your finances. Poor payment habits and high debts lead to low credit scores. The consequences include loan rejections and higher interest rates. Fortunately, you can clear up common credit issues by learning better ways to manage your finances and credit.
Managing Accounts Online
Signing up for online account management programs to pay your creditors doesn't require exceptional computer skills. You can set up your monthly bills so that creditors automatically deduct the money from your personal bank account. This method requires good budgeting and having funds in your account when the bank drafts occur.
Cash vs. Credit Cards
Carrying cash and limiting the use of credit cards is another method to help clear personal credit issues and improve your finances. Using credit cards and then quickly paying off the debt helps your personal rating. If you don't pay off the debt and choose to carry a balance from month to month, this further damages your credit rating. Aim to pay off credit card charges every month to keep debt to a minimum.
Talk with Your Creditors
Asking creditors and lenders for help can protect your credit rating and help your personal finances. The first response to cash-flow problems may include skipping a payment and then dodging phone calls from your creditors. "Disappearing acts" do not help the situation, and with zero communication, creditors will charge late fees and possibly send your delinquent account to collections. On the other hand, communication at the first sign of trouble can open the door to different options. For example, you creditor may permit you to miss a payment or two without penalty, reduce your minimum or offer an extension on due dates.
Increasing Disposable Income
A lack of disposable income is often linked to credit problems. Plus, there's a greater chance of using credit cards for essentials when cash is low, which can bring on excessive debt and a lower credit score. Insufficient funds to pay creditors and lenders has a snowball effect that begins with a missed payment.Think of possible solutions to cash-flow problems. Approach your employer about a raise or overtime work, or look for part-time employment to increase weekly income. Earn an extra $100 a week and you've increased your monthly income by $400 a month.
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