Happy New Year Everyone! January brings upon the arrival for those dreaded credit card bills that many people rack up over the holiday season. We live in a society that tends to over spend at Christmas, which is easy to do when we use credit and debit cards. So what do you do when you can’t pay all of your bills in full? Do you pay one card in full and say ‘oh I will pay the others next month’? We have put together some tips to maintain your credit score while carrying debt, or anytime.
Many people have no idea what makes up your credit score so how would they know how to maintain it. Your credit score is based on several factors, such as repayment history, balances carried, use of credit, etc.
Always make the minimum payment: While it’s ideal to pay the entire balance off every month, sometimes it isn’t financially feasible. Ensuring you at least make the minimum payment on each of your accounts each month will keep your credit ratings in the number 1 position, which will then have a positive ripple effect on your credit score and overall credit history.
Don’t be late (or skip out) on making payments: This tip is self-explanatory. Repeatedly being late on your payments will reflect poorly on your credit report and bring down your overall credit score.
Don’t max out your credit limit: Remember, just because you have a $5,000 limit—doesn’t mean you have to charge that amount to your card. Maxing out your card(s) will negatively affect your credit score (stay under 75% of your available credit to maintain the highest credit score).
Don’t let your credit accounts fall into collections: Any accounts that fall into collections will remain on your credit report for a period of 7 years from the date of the last activity. This may make it difficult to obtain any further type of credit or loan during this timeframe. If you have an account that has gone into collections and it becomes possible to start repayment, you should do so. This will show that you are serious about rebuilding your credit.
Consolidation may be an option for you: Paying off all balances in your mortgage to streamline cash flow can not only improve your credit rating but also make your monthly obligations into a more manageable payment.
Contact us today to review your current cash flow and see if there are ways we can improve it.