If the credit card is a very practical solution to manage your finances and expenses, it also involves taking precautions to avoid getting into debt or ending up with a negative banking history. But how to use your credit card while taking care of your credit rating?
Credit card, rating, debt: understand everything
The way this payment method works is simple: you can pay your expenses thanks to the money advanced by the lender, and you then pay an invoice for your consumption, subject to interest rates and possible fees, which vary. from one institution to another.
Compared to a debit card, this system has the advantage of less restricting you because you can pay more than you actually have on your account. It also allows you to create a credit history, which when done well, is an attractive point for future borrowing.
However, it is also a disadvantage for people who have difficulty managing their money and limiting their expenses. The consequence of misuse of a credit card is directly related to the credit rating. This is a score ranging from 1 to 9, estimating your ability to repay a debt as well as the history of your expenses and finances. A credit score indicates your level of reliability for an institution that would like to give you a loan: a low credit score is bad news for banks that will be reluctant to accept a loan.
How to manage my credit card to keep a good rating?
Monitor your expenses
This advice applies to credit card users and any other means of payment. By establishing a budget and following it seriously, you will be able to learn how to better manage your money and limit your ability to exceed your payment capacity, which results in costs that are avoidable.
Pay your bills seriously
Once your expenses are made on your credit card, you contract with your bank a debt of the sum paid, to which are added interest. So, avoiding having to pay other fees: late penalties, increased interest rates … Pay attention to your bills and pay them on time: a person who takes care of them within 30 days after receiving the document with the best rating possible on the scale from 1 to 9. Be this person!
Choose a credit method that suits you
In addition to an encrypted rating, the credit rating includes a letter that indicates the type of loan you have taken out. There are different types of credits depending on your needs, the kind of expenses you want to cover, the way you repay that cash advance.
What to do despite a bad credit rating?
You had to deal with an unexpected expense and you need money quickly, but your credit rating is such that your bank does not want to lend you money? Rest assured, there is the solution of the personal loan! Call on a private institution like Good Lender Loans, which lends you money to meet your urgent need for money, without having to submit to a credit check.
Pay attention to the use of your credit card. A wise use is the guarantee to maintain your credit rating and protect you from possible consequences, so take your precautions financially!