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Don't forget to save while building your credit

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By: Amy
on 16th Jan,2015

Establishing a good credit history requires you to have the habit of paying back borrowed money on time and in full.
Don't forget to save while building your credit

Working on having a good credit history and saving money at the same times is possible; although it is easier said than done. Establishing a good credit history requires you to have the habit of paying back borrowed money on time and in full. If done successfully, you will have a strong credit report and a good credit score which will give you access to better credit deals and lower interest rates.

Even though you don’t like the idea of using debt or borrowing money, it plays a very crucial role when working on establishing a good credit history or improving your credit score. Listed below are some tips that can help you save money while building your credit.

• Shop Around and Compare the Interest Rates, Terms and Rewards- Regardless of what you want to purchase, in order to save money you need to spend some time shopping around and comparing prices. This mindset should always apply to products and services that are associated with your credit. Therefore, when applying for a new line of credit or a loan, make sure that you get at least three quotes. Compare the interest rates, the terms and conditions and the rewards that may apply so you can settle on the company which offers you the best deal and benefits you the most. If there is a company that you prefer, but another company is offering you a lower interest rate, do not shy away from negotiating with your preferred company. Keep in mind that companies want your business, so there is a chance that your preferred company may be willing to match what the competitor is offering you.

• Use the Right Credit Card- Not all credit cards are the same. Each credit card comes with different rewards, benefits and terms. If you are unaware of what your credit card is charging you, you may be spending a great deal of money on unnecessary charges and fees. So, before you apply for a credit card, make sure that it is the right card for you. For example, if you have no problem with paying your monthly balances on time and in full, you can consider a credit card with an excellent rewards program and charges no annual fee even if it has a high interest rate. In contrast, if you find yourself making only the monthly minimum payments, you should be better off with a credit card with a low interest rate even if it doesn’t offer a rewards program. Using the right credit card will be beneficial in helping you save money while working on establishing or improving your credit.

• Automate your Payments- You should perform a credit report check to keep yourself updated regarding your debts. If you fail to do a credit check regularly, you debt may get out of hand due to you missing your payments, which could lead to higher interest rates and even more debt. In addition, you might incur additional fees such as late and overdraft fees. A quick solution is to sign up for automatic bill pay. The concept is simple, you sign up to have your bill paid on time and your creditor will draft the amount from your bank account each month at the proper time. Having your bills paid automatically can prevent you from missing and late payments and may help you save money on added fees. In addition, paying your bills on time will help your credit history and can improve your credit score.

• Stick to a Budget- One way to stay on top of your finances while saving money is to come up with a budget. Having a budget is very important so you know where your money is going, which expenses are necessary and how much money you have left after your needed expenses. A budget can help you avoid overspending and accumulating unnecessary debt. Budgeting takes a little effort on your part, but once you do it, you will find it easier to save more by spending less.

• Consolidate your Debt- Consolidating your debt has pros and cons, but it can be beneficial in helping you improve your credit if you have multiple debts that you need to pay. Debts can become overwhelming when there are numerous bills that you have to handle. One way to make sure that you aren’t missing your payments is to consolidate them into one account. This means you acquire a single loan to pay off your other debts, which would roll your debts into one manageable payment. This can help you save money by allowing you to avoid unnecessary charges, late fees and the negative impacts on your credit score in case you miss a payment. You should know that debt consolidation does not work for everyone as some debt consolidation loans come with a high interest rate. The decision to consolidate your debt is your alone and you should consider your financial capability as well as the new loan’s interest rate before taking any action.

If you lead a very busy lifestyle, sometimes you may overlook unnecessary charges and miss paying your financial obligations which not only affects your wallet but also your credit. If you follow the tips mentioned above, you will be able to stay on top of your finances while building your credit and saving money.

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