Tips To A Good Credit Rating
As most consumers eventually discover, credit ratings play a huge role in the ability to secure financing for large purchases like homes, cars, boats, jewelry, and other expensive items. Credit ratings also have an effect on less innocuous financing like credit cards and even savings and checking accounts. Following are a few tips to help you maintain a good credit rating so that when the time comes, you are in a good position to make those large purchases in life.
First, create a budget. And stick to it! Impulse buying is about the worst strategy you can have when it comes to money management. We often don’t notice how quickly bills pile up and just because a loan representative tells us we are qualified to make a purchase, that doesn’t mean we should!
Once you have your budget planned out, you can also list the larger items you hope to buy at some point in the future. Look at these like goals and work towards buying them one-by-one, which will help you avoid impulse buying.
Most retail stores are counting on you to make impulsive decisions when out shopping, which is how they make most of their money. Don’t fall into this trap and be prepared to fight impulsive urges. Buying on a whim can result in a strained budget and buyer’s remorse later. When you strain your budget, you put yourself in a position to miss bill payments when an emergency comes up and cash is short. This is how bad marks begin to appear on your credit report. So just say no to impulse buying!
Another benefit to resisting impulse buying is that you can shop around and take advantage of competing stores to find the very best deal. Also, most stores have price guarantees so hold onto your receipt after you make a purchase because if you find a better deal elsewhere soon after your initial purchase, you can often get the difference back from the store where you originally purchased the item.
Though these don’t directly affect your credit rating, they can increase your cost of purchase and further your strain your budget. What I am talking about are extended warranties. Interestingly, fewer than 20% of items purchased on extended warranty are ever brought in for repair. Is your peace of mind worth that extra cost? You’ll have to decide for yourself, but it isn’t for me. The standard warranty usually is sufficient.
The bottom line when it comes to maintaining a good credit rating is to stay in control of your spending. Budget, plan for large purchases, and don’t spend more than you earn. That’s the easy formula for money management and a good credit rating. All that’s left is to go and do it!