Who wants to feel anxious before going on holidays? If you have terrible credit and you couldn’t qualify for low-interest loans for going on a trip, it is time to make certain changes into your buying behavior. The reason is simple—spending for the wrong things can seriously damage your credit rating.
Here are some of the right reasons to check your credit rating before you spend your paycheck or use your credit card for holiday purchases:
You will not run out of cash
There are many people who don’t know what awaits them in the near future – simply because they do not know if their money will be able to cover all their monthly expenses. There are also travel expenses which can go out of hand and lead to unexpected future events like foreclosure, bankruptcy and so on. So, no matter how tempting that trip to Bali is—remember that one wrong purchase decision can lead to unplanned use of money and lead to a bad credit situation.
You can improve your credit score
Unless you want to face problems like rejected loan application and being turned down for a raise or promotion, building your credit must be one of your top priorities. Thinking before you buy something expensive or purchase a huge travel deal also keeps you from dealing with pestering credit collectors or utility operators who wouldn’t give up on reminding you of your missed payments.
When you have spare money left for your credit card payments and loan installment, you’ll feel confident in checking your monthly payments. It is also easier to organize your bills and debts with a well-set deadline when you always make sound purchasing decisions. It’s because you don’t have to deal with guilt and regrets of buying something that you cannot really afford at the present time. So, how do you do it? First, do a self-check before you decide to buy something. Perhaps you don’t really ‘need’ a new car, your old car will do. Or, it will be better to put off buying a brand new house—because you can still find better deals in the near future-when you are financially ready to pay for a low-interest mortgage.
You can use your spare cash to earn more money
Aside from the emergency fund, there are other areas where you can put your money and grow it at the same time. You can invest your extra cash in real estate and stocks or start a small time business.
In addition to making better buying choices, here are tips to boost your credit rating:
- Always track your payments – Have your credit providers been submitting the right reports to the credit bureau or not? You can request for a copy of your credit score to see if they also update your credit history. Checking your repayments can also help you ensure that the credit company really received your payments, especially those that you personally handed to credit collectors, or those automated payments.
- As much as possible, schedule your payment on the dates when you are most likely to receive money, either form your employment or your business – You can also request your credit card provider or loan officer to change the payment schedule—if they agree, set all your payments on the same date, for convenience purposes. It will also keep you from forgetting the payment dates. Remember that one of the major reasons why people have bad credit is not really because they have no money to pay; but they simply forget to pay on the given time, or the timing is not right—the bills arrive when they have no available funds to pay.
- Save money for emergency purposes – Sometimes, health care insurance and car insurance will not cover anything, you also need to shoulder outside the pocket expenses. When car accidents or health issues come up at times when you are really broke, it will be difficult to fight the impulse of overcharging your credit cards or line of credit. To avoid these things from happening, it is advisable to load up your emergency savings fund at times when you have extra money. If your job or business requires you to look good, like a beauty consultant or a fashion guru, save money for your fashion emergencies. You shouldn’t go out there looking horribly when you are attempting to encourage your potential client that you are good at what you do.
Categorize your emergencies and save money for each of them. If you have insurance, re-visit the terms of the agreement and make sure that they include those costs that you think could happen in the near future. A good example is medical coverage. If your family has a history of heart disease, make sure that the insurance policy covers heart illness and the possible medical interventions required. Most importantly, always keep in mind how big purchases can affect your credit rating.