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Lenders use your credit history to determine whether they’ll lend you money and how much they’ll charge you. Borrowers with higher credit scores usually pay lower interest rates.
Make sure to shop around and compare rates before applying for any loans. Also, consider taking a loan with a co-signer, as on-time payments can help build credit.
A good credit score is vital to a bright financial future, but overspending can make it challenging to achieve your goals. This can happen for various reasons, such as lifestyle creep, FOMO (fear of missing out), wanting to reward yourself or boost your mood, or trying to keep up with social media influencers.
Overspending can also be caused by a lack of planning or unexpected expenses like replacing tires, a home repair, or a medical bill. When you rely on credit to cover these costs, you can find yourself in trouble when the debt becomes unmanageable and interest fees pile up.
To prevent overspending, create a budget based on your income and expenses. Try to use low credit financing Loganville GA, or your credit card only for purchases you can afford to pay in full each month, and consider switching to using debit cards or even cash for day-to-day expenses. This will help you feel the pain of spending and may stop you from accidentally racking up a large balance.
Pay Your Bills On Time
It’s a truism: Bills don’t care about whether you’re experiencing an income disruption, coping with illness, or simply living too high on the credit hog. They keep rolling in, and overdue bills can cost you a lot of money in late fees and interest charges.
You can set recurring bills to autopay and schedule reminders before each payment to prevent forgetting or getting behind. If you handle your bills manually, select a day of the month when you’ll review your list of outstanding obligations and make payments. Set each recurring payment to occur just before the due date to minimize the chance you’ll spend that money on something else.
Checking your statements regularly can also help you spot a fee increase sooner or a discount on an add-on that’s about to expire, saving you money and reducing stress. If your budget can’t accommodate your recurring expenses, you may need to cut back or make other changes, such as switching to a cheaper cable service or using a flip phone instead of an expensive smartphone.
Avoid Late Payments
If you don’t pay your bills on time, it reflects poorly on your creditworthiness and shows future lenders that you may not repay debts. This is why lenders value on-time payments so highly. Late payments are also often accompanied by add-on costs that you should avoid, like a high-interest rate.
If your lender or card issuer charges you a late fee, ask them to waive it. This could be possible if it’s your first late payment or you can demonstrate hardship. Sometimes, you can even work with them to reset your penalty interest rate if you make six months of on-time payments.
Keeping your spending under control is the best way to avoid late payments and maintain a healthy credit score. Consider setting up autopay for your minimum due or statement balance to help keep you on track with your payment goals. Most lenders and credit card companies also offer payment alerts through their dashboards or mobile apps that you can use to set up reminders.
Pay Down Your Debt
Credit cards are the most common source of debt, but you can pay down your balances and improve your credit score by taking a few key steps. For example, you can negotiate with individual creditors to lower your minimum monthly payments, waive fees, or reduce interest rates. You can also use a debt consolidation loan or a secured debt payment plan to pledge collateral such as your car to secure a low-interest rate.
Alternatively, you can borrow from family or friends at a lower rate or even for free. Keep an emergency fund covering at least three to six months of your basic living expenses. Any formal borrowing will drop your credit score by a few points, but your score should rebound within a few months if you make your payments on time. In addition, you should avoid taking out payday loans.