Here’s a simple tip that can help you save money in the long run, be watchful of your credit score and credit accounts. If you aren’t careful with credit cards, you could end up with a fortune to pay back in interest. I recommend always paying your balance in full each month to avoid paying any interest at all, but sometimes that isn’t so easy. Make sure you stay organized when it comes to your credit accounts. Make online logins for each of them and keep their balances as low as possible. I once bought a pair of socks with a Sears credit card and subsequently forgot all about it. Months later I received a call to “collect a debt” of over $500 for that one pair of socks. This is because I was getting late payment fees which were then in turn also accumulating interest. Don’t be like me, pay your bills on time and always watch your credit.
So what about your credit score, what does that have to do with saving money? Well, If you’ve ever tried to make a large purchase on credit with a financial institution, you know that this usually requires a good credit score. If you wanted to purchase a brand new car, a credit score is one of the ways that the bank has of determining your reliability when it comes to paying back debts owed. If you frequently miss payments or have a large sum of debt already, your credit score may not be as high as you need to get a proper loan for a new car or other big purchase. The better the credit score, the better terms you can get on your new loan which means a much lower interest rate and less money that you have to fork over.
So what gives someone a good credit score? Well the answer is simple, but the way to achieve it can be more difficult. In order to raise your credit score you must always pay your credit cards and loan payments on time, and have a low proportion of accumulated debt. Sounds simple right? Well, it isn’t always easy, especially for people who don’t yet have any established credit.
The problem is, it can take years and years to establish a good credit score because in the beginning no one trusts you. Would YOU loan money to someone you only know by name? I doubt it. So your first credit card likely doesn’t have much spending power, and therefore not much affliction on your overall credit score either. If you’re just trying to build your credit but are having a hard time getting approved, I recommend department store credit cards. They are usually easy to apply for in the store and take only a minute or two to be approved. BUT BE CAREFUL – these cards have a VERY high interest rate, so make SURE you pay them off in full each time you use them.
Check your credit score every month or so to see if the actions you’re taking are having a positive effect on your score. It’s simple to check and now there are numerous sites that truly let you check it for free at anytime, with no credit card necessary to sign up. I personally recommend http://freecreditkarma.com. I’m not affiliated with them in any way, it’s just a simple no hassle way to check your credit score quickly. Also, you may have heard the myth that checking your credit score frequently can be damaging to your credit – well that myth is officially busted. Feel free to check your credit score whenever you like.
If you checked your credit score recently or know what it is and aren’t happy with the results, there is a service that I’ve found that works better far beyond anything else I’ve tried. The site is Credit Secret – and that’s just what they are too most people, a secret. I used them reluctantly at first too be honest, but I am VERY pleased with the results. They were able to get that aforementioned Sears account off of my credit report, and in just 3 months my credit score went up by 150 points! I seriously couldn’t be happier about it. If you’re at all like me and made a few credit mistakes in the past, I highly recommend you check out Credit Secret, they can really help.