If you’re a fan of the famous “Expense” You may have interest to think of the credit concept and never forget the portion” pay later “. Because when you pay late the interest accrues more and more. They accumulate up the bill.
Credit is a useful tool as it uses with its head.
Use credit wisely
The golden rule of credit is to ensure that we have the means to repay in the short term. Otherwise, it can mean to seize the properties and see the credit rating make a landing.
When it’s correctly used, the credit allows – in exchange for spreading the repayment – to afford goods faster, and enjoy it without delay to give time to pay without costing a penny.
For example, when you buy something with your credit card, you will not have to pay anything before receiving your account. It usually leaves you three weeks to settle your balance. Between the purchase and the payment, it can take up to one month and a half.
As you know it well that and you pay off your balance each month, the credit is really great. But if you do not pay quickly, watch out! Today, according to the maps, rates can vary from less than 10% to 30%!
What is a credit score?
This is the value of your credit in the eyes of financial institutions. Better the rating, the less complicated to do business with them, especially when it really counts.
Ways to build credit
To build your credit, you must:
- Have the sufficient money in your account to cover your pre-authorized payments
- Pay your bills on time,
- Pay at least the minimum monthly payments on your credit card before the due date, etc…
Do not hesitate to ask a small credit limit to build your score. This is among the good ways to build credit history. Thereafter, you can make it increase when you become more experienced with the credit.
When we start to consume more actively, it must be careful not to overdraw. That it means spending which puts us in the red, as they say. One NSF transaction, or a few small outstanding balances, it can damage a financial reputation. When it overtakes us as when buying a car or a house, we find it a lot less funny…
Of course, this is not mandatory, but protection against overdrafts could help you protect your credit rating.