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photo by steed media service
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Knowing
your weaknesses can prevent your credit from snowballing into a
problematic situation or financial meltdown. Understanding what those
scores mean can improve your overall economic situation. –cw
No knowledge of credit report.
Keep a sharp eye on your credit scores. Credit scores range from
350-850. The higher your credit score, the better. Typically, anything
above 690 is good. A score below 620 is considered
“subprime.”
Overextended credit cards.
If you’re struggling to meet payment obligations, call creditors
to request a payment plan or payment reduction to get back on your
feet. You can request to skip a payment, but be forewarned: that
skipped payment will cost you in more accrued interest and possibly
lengthen the amount of time it takes to pay off your balance. By all
means, attempt to pay that balance down as much as possible and pay all
future bills on time.
Living without a budget.
Keep a record of your spending. Then, calculate your monthly income.
According to moneycentral.com, essential spending comes out of the
first 60 percent of income. Keep in mind that housing expenses should
not exceed one-third of monthly income.
Using debit cards instead of cash. By using cash, people tend to think twice before purchasing frivolous items. Whenever possible, leave the ATM card at home.
Ignoring warning signs and not contacting lenders. Lenders
are ringing your phone off the hook, so instead of hoping they will go
away, it’s best to face the music. Be honest about your financial
situation. Most companies will work with you.
No repayment plan for bills.
Even if it’s only a few dollars a month, get on a schedule so
that creditors know you are serious about digging yourself out of debt.
Set up a repayment schedule.
No savings.
Everyone needs an emergency fund of at least $500 in the bank. While it
may seem like a small amount, it can serve as a stopgap measure just in
case the unthinkable happens. Use your income tax refund or set up a
small monthly electronic transfer from your checking account to a
high-interest savings account.
Eating out. Instead
of plopping down $7 a day for lunch, eat last night’s leftovers.
That $35 spent every week on that fast-food combo equals $140 a month
and more than $1,600 a year. That’s not-so-small potatoes.
Unbalanced checkbook. Balance your checkbook. Sloppy record-keeping can easily lead to hundreds of dollars in insufficient funds fees.
Failure to plan.
Acknowledge your spending habits. Admit your faults and understand
where you are headed if your financial routine doesn’t change.
