Managing Future Credit
After Rebuilding Your Credit, You Still have Work to Do
It is important to use your new credit appropriately to avoid any more problems. Successful credit management includes learning to be a better shopper and keeping records of credit use and finance charges. Follow these suggestions:
* Plan how to pay for an item before purchasing it rather than buying it now and worrying about it later.
* Track credit expenses by keeping a written record so you know how much you charge each month. Rubber-band a piece of paper to your credit card and promptly write the date, amount, and merchant. This helps you to not overcharge and provides an easy reference when reviewing your statement for accuracy.
* Keep an eye on your creditors by always reading your statement and all inserts. Make sure you know your due date, credit limit, APR, annual fee, minimum monthly payment, APR for balance transfers or cash advances, etc. Creditors can change your terms of agreement with as little as 15 days notice. If you don’t agree with the new terms, consider canceling the account. Before canceling, find out if the company will expect the balance to paid in full when the account is closed or if you can continue to make monthly payments until the balance is paid in full. Also, ask if the interest rate changes (increases) on the balance if you close the account. If so, wait until you pay off the balance before closing the account.
* Develop a system for paying bills on time to avoid late fees and protect your credit history. Know when bills are due to arrive, and when received, put them in a safe place. If your bill does not arrive when expected, call the company to inquire. Use a monthly calendar to write the amount on the due date, and mail your payment at least one week before the due date. Save credit receipts and payment stubs for future reference.
* Don’t charge disposable items (gas, food, or other debts) unless you intend to pay the balance off every month. Who wants to finance a gallon of milk for 7 months?
* Transfer high interest card to card with lower rate. Watch interest rates and always shop for the lowest rate, while paying close attention to any fees. If you transfer a balance, always cancel the higher rate card by notifying the company in writing and be sure to send it to the appropriate address. Make sure there is not a transaction charge to transfer the balance. Ask the issuer of the new card what is the method to transfer balances. For example, do they have payment checks they can send you? Make sure the lower interest rate on the new card includes balance transfers.
* Only charge what you can afford to pay off each month. Use credit to your convenience. Think of credit cards as an interest-free loan that you pay in full every month. Limit credit use to 15-20% of your monthly net income.
Refer to budgeting section.
* If you can’t pay off the balance, always pay more than the minimum payment. Do not fall prey to the minimum payment syndrome where you squeak by each month by only making the minimum payments. Consider this example: A consumer has a credit card with a $5100 balance at 27.99% APR. The minimum payment is $104 and the interest charge is $109. Making minimum payments, will this ever be paid off? NO, you will never pay off this balance.
* Concentrate on highest interest credit card. If you have more than one credit card balance, pay as much extra money each month as you can on the highest rate account while still making payment to the others. Once the card with the highest interest rate is paid off, use that payment and apply it to the card with the second highest interest rate. Repeat as necessary.
You can find information about Mortgages, Student Loan Consolidation, Credit Repair, Automobile Loans, Refinance Loans, Debt Consolidation, and more at Loan-Review.net.
* Plan how to pay for an item before purchasing it rather than buying it now and worrying about it later.
* Track credit expenses by keeping a written record so you know how much you charge each month. Rubber-band a piece of paper to your credit card and promptly write the date, amount, and merchant. This helps you to not overcharge and provides an easy reference when reviewing your statement for accuracy.
* Keep an eye on your creditors by always reading your statement and all inserts. Make sure you know your due date, credit limit, APR, annual fee, minimum monthly payment, APR for balance transfers or cash advances, etc. Creditors can change your terms of agreement with as little as 15 days notice. If you don’t agree with the new terms, consider canceling the account. Before canceling, find out if the company will expect the balance to paid in full when the account is closed or if you can continue to make monthly payments until the balance is paid in full. Also, ask if the interest rate changes (increases) on the balance if you close the account. If so, wait until you pay off the balance before closing the account.
* Develop a system for paying bills on time to avoid late fees and protect your credit history. Know when bills are due to arrive, and when received, put them in a safe place. If your bill does not arrive when expected, call the company to inquire. Use a monthly calendar to write the amount on the due date, and mail your payment at least one week before the due date. Save credit receipts and payment stubs for future reference.
* Don’t charge disposable items (gas, food, or other debts) unless you intend to pay the balance off every month. Who wants to finance a gallon of milk for 7 months?
* Transfer high interest card to card with lower rate. Watch interest rates and always shop for the lowest rate, while paying close attention to any fees. If you transfer a balance, always cancel the higher rate card by notifying the company in writing and be sure to send it to the appropriate address. Make sure there is not a transaction charge to transfer the balance. Ask the issuer of the new card what is the method to transfer balances. For example, do they have payment checks they can send you? Make sure the lower interest rate on the new card includes balance transfers.
* Only charge what you can afford to pay off each month. Use credit to your convenience. Think of credit cards as an interest-free loan that you pay in full every month. Limit credit use to 15-20% of your monthly net income.
Refer to budgeting section.
* If you can’t pay off the balance, always pay more than the minimum payment. Do not fall prey to the minimum payment syndrome where you squeak by each month by only making the minimum payments. Consider this example: A consumer has a credit card with a $5100 balance at 27.99% APR. The minimum payment is $104 and the interest charge is $109. Making minimum payments, will this ever be paid off? NO, you will never pay off this balance.
* Concentrate on highest interest credit card. If you have more than one credit card balance, pay as much extra money each month as you can on the highest rate account while still making payment to the others. Once the card with the highest interest rate is paid off, use that payment and apply it to the card with the second highest interest rate. Repeat as necessary.
You can find information about Mortgages, Student Loan Consolidation, Credit Repair, Automobile Loans, Refinance Loans, Debt Consolidation, and more at Loan-Review.net.
