How To Get Credit Smart

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It is very easy to get carried away with your finances only to find that suddenly you are struggling with a mountain of debts. This may be from continuous overspending. It doesn’t have to be large quantities; small amounts add up quickly over time. Or it could be from redundancy or due to unforeseen circumstances arising.

Although even if you are not in debt, it is very important to get credit smart so that you can stay within your means.

Having a copy of your credit report and knowing your credit score

It is important to get a copy of your credit report so that you can see what information is held about you and your debts. A credit report holds the information that is used to calculate your credit score. With this information, you should be able to gauge how likely you are to be able to receive credit should you be looking to get any and how you can improve your score so that you become more desirable to lenders.

Nowadays, it is relatively easy to get access to both your credit report and your credit score by way of companies such as Experian or AnnualCreditReport.com (which offer free annual reports). It is a good idea to check out your report from a couple of these companies so that you are sure that you know what you are looking at. They should also be able to advise you on additional ways you can heighten your credit score and improve your credit report.

Check your own finances

It is also a good idea to keep an eye on your finances. Whether you deal mainly weekly or monthly doesn’t really matter as long as you keep on track of what you have coming and going out. If you find that you have more going out than coming in, it is time to pull in on the rains and cancel any non-crucial luxuries and payments, at least until you can well afford them again.

The next step is to set yourself a budget of a realistic amount of money that you can afford for the necessities of life to see if there is any money left for the fun items. If you have a lot of debts or creditors, you may find that it is easier and could work out cheaper, when considering the interest charges, to consider a debt consolidation loan. Doing this means you only have one payment coming out on just one date a month, so you can better keep track of where your money is going. Debt consolidation may lower your interest rate or monthly payment but be sure to consider origination fees and the length of repayment – which can offset the savings or even increase the total you pay over the life of the loan.

What you can do to help improve your credit score

One of the easiest ways to improve your credit score is to have different types of credit, such as loans and credit cards. If you are doing this, then it is critical that you make your payments on time and, when possible, clear your balance.

This will prove to lenders that you are sensible and can handle various types of credit, so it will show you to be a much lower risk than someone that only has one type of credit or rarely pays off their balance.