Source: The Frazier Team
Credit ratings are one of those aspects of your financial status which will determine your level of trustworthiness when it comes to applying for credit cards, loans, or mortgages. A low credit rating indicates a person’s inability to fulfill the prerequisites required in order for them to be considered eligible for the aforementioned financial processes. In the event that you are one of those people who are looking to improve your present credit rating in order to be eligible for loans, mortgages, and credit cards, here are 3 easy and effective steps which will help you in balancing your finances.
The three easy steps are as follows:
- Understand your own credit score and the reason for it not being up to standard
- Develop a strategy which will not only enable you to balance your credit but will prevent you from causing imbalances in the future
- Pay bills smartly
Understanding what went wrong with your credit score in the first place will enable you to not only develop a credit balancing strategy, but will also help you understand what you need to do and not do in order to maintain a positive score.
This is illustrated as follows –
Source: MDI Mortgage Group
Source: MDI Mortgage Group
In the event that you have too much debt, it is a good idea to consult with a financial planner and organise a repayment strategy through which you can repay it in convenient installments. If you overspend, it is time to restrict your spending especially if you have a penchant for overusing your credit cards. Another issue involves owning too many credit cards as it is a red flag for banks if you fail to clear payments. This in turn will further damage your credibility. Rid yourself of unnecessary cards and stick to a budget, in order for your attempts to reflect in your financial statements. If potential lenders and brokers notice that you are making an effort to balance your credit score, they will be more likely to consider your case.
Repayment of loans, timely paying of bills and a limit on your credit card expenditure will work towards keeping your financial planning consistent and free from discrepancy and overspending. It would also be beneficial for you to check your credit score constantly rather than intermittently in order to be aware of any risks which could negate your credit score further.
You can also strategise smartly when it comes to payments by taking steps which include paying bills on time. Paying bills twice a month in the event that the overall bill is very high will save you from incurring late fees and additional fines as your attempt at clearing at least half the amount will be noted and you will be let off on the basis of trust.
A healthy credit score constitutes an essential element of your financial plan and will be the deciding factor when you choose to invest or take a loan. It is wise to keep a healthy credit score at all times in order to ensure that you have enough credibility to invest and borrow when required.