I remember the doctor once said to me when I was a small boy, “prevention is better than cure,” and those words had such a profound effect on me when I first started to get credit cards! Although the credit card agent explained it well to me about how not to be trapped in a bad credit scenario, I wasn’t really paying attention because I wanted to get so much of the good stuff. And then it happened, and I got stuck in that bad credit scenario like he told me, except this one was not a scenario of any kind – it’s a fact of my life. Then I remembered what that doctor said and realized that his words was applicable not just in health and wellness, but in every aspect of my life!
So, I fought back and cleared my bad credit record and applied that principle ever since. Now I am living a very satisfied life because I know I’ll never fall back into that trap ever again. In case you’re in a bad credit situation also, here are some pointers that I’d recommend.
Do your Due Diligence
The problem with paying your bills days or weeks after past due is that the bank will charge you interests, and this is not good especially if those interests are accumulated over months of late payments. On the other hand, if you pay your bills on time, you will have 0% interests on your credit card and if the bank has some special offers, you might even get rebates! So always remember to pay your bills on or before their due dates and do this religiously, so you won’t get stuck with lots of interests and eventually get a bad credit rating. Better safe than sorry I always say.
Avoid Maxing out on your Credit Card Limits
Overspending will ultimately lead to penalties and accumulated interests and you will come to genuinely hate bills coming in the mailbox every time you open it to read them. Leave at least 10% – 20% room to breathe each month while you wait for your credit card bill to refresh back to zero on the following month before making another purchase. In fact, if you play this one right, the bonus points and rebates that banks and business franchises give on purchases are essentially beneficial without you having to resort to scraping the bottom of your credit card’s “barrel.”
Think of it this way; you go to stores A, B and C and buy stuff at 0% interest, then you go to the next stores D, E, F and G to make purchases with 5% discount on bulk orders of 50 units per product; and finally you go to stores H, I and J that offers $25 gift checks for every purchase of $200 or more on their products. Let’s assume that you’re a regular customer at these stores and you have a yearly purchasing record with them. Your total annual rebate will have been more than 50% than what the bank will charge you on your monthly recurring payments plus interests which is essentially a huge savings on your expenditures.
No Partial Payments, Please!
When you pay your bills, pay them in full and don’t leave any remaining balances on your account. This is important because those back accounts will soon accumulate and they’ll be no less harmful to you than interest rates charged to you whenever you’re late on your payments or when you’ve maxed out your credit limit. They are a potential problem waiting to happen. So tie up all lose ends before they get entangled and choke you!
Don’t Hog on all sorts of Credits and Learn to Back Down
Finally, the most important thing to remember when you want to maintain a good credit score, you must never borrow too much money too fast. It’s understandable that most people want everything in an instant in their lives, because they think that material wealth will give them financial security and make them feel that they’ve achieved something in their life. However, the truth is exactly the opposite of this, because what loans, credit cards, mortgages actually does is destabilize your personal finances as each one of these forces you to be financially obligated with them.
So if you should feel the need to get loans and credit cards, then give at least 6 months’ time in the succession of acquisition before applying for them in order to not dig yourself a very deep hole of debt.