When it comes time to perfect your credit, here;s a list of things to keep in mind.
P.S. There’s no ‘right time’ to start bettering your credit. Don’t wait til you want to buy a car or put an offer on your dream home.
- If you think being late on a payment isn’t that big of a deal.. think again. Really though, any kind of monthly payment stinks.. but one with a whole bunch of interest stinks a lot worse. With most credit cards carrying an interest rate above 12%, missing even one payment can result in a huge interest payment. Just don’t be late, OK?
- Reductions Matter: Negotiating isn’t always possible.. but it is worth it to ask. Some numbers have more wiggle room than you’d expect. When you go to open a new line of credit, try to negotiate your rates! You may not get your asking rate but you and your lender might come to a fair compromise. Yes, a 0.5% reduction of your interest rate DOES make a difference. Say you get a $1,000 loan with a 17% interest rate reduced to a 16.5% interest rate… that’s a $5 savings, every month!
- Safer ways to pay: It might sound weird (it did to me when I first heard it) but credit is the safest way to pay! Safer than cash and debit options because you can report any suspicious activity to your company and they will take care of it right away!
- Big one: CREDIT DOESN’T BUILD ITSELF!: I really wish someone would have told me this when I was younger. I expected to have a great credit score right out of high school because I hadn’t ever had a credit car, I bought my car outright (for $300 lol) and my medical bills were paid for by my parents.. or so I thought. I learned quickly that just because I didn’t use any form of credit at the time, my credit score was slowing going down. Start soon, get a credit card and make small purchases, and pay then off right away. In the long run, this will save your money! When you go to buy a house or a car, you’ll thank me.
- Don’t be fooled by your Credit “Limit”: Just because you got approved for a $3,000 credit line, doesn’t mean you have $3,000 to spend. Most credit cards recommend that you spend about 30% of your credit line.
- Remember, you have to pay everything back: I really wish my parents would have told me to start my credit earlier… I learned the hard way that bills add up quickly… and before I knew it, I was deep in the hole. Keep in mind everytime you make a purchase, you have to pay that money back. Hopefully sooner rather than later.