Tips On Managing Your Credit

Your credit is an important factor in determining many factors including your mortgage rate and many other things! If you misuse your credit or borrow too much, you can hurt yourself financially. Here are some tips on how to best manage your credit! 

1. Pick a credit card that works for you. 

Get a credit card with a low interest rate and look into what the annual fee is. Compare different credit cards and their advantages and choose the best credit card for your individual circumstances. Ideally, you should pay off the balance in full every month.

2. Build a credit history. 

If you want to build a good credit history, you will need to be responsible with your credit cards. Pay off your balance every month. If you have balances on your cards, focus on paying them down as soon as possible. Close your credit card accounts if you have paid off the entire balance and are no longer using the card.

3. Try to lower your interest rate. 

Many credit card lenders will give you a lower interest rate if you call them. If they are unwilling to work with you, transfer your money to a new card with a zero interest rate. Often, personal loans are a better option than credit cards. With a personal loan, you generally will pay a lower interest rate. You also can make equal payments on a personal loan over time. With a credit card, you pay a lot upfront, which slowly decreases each month until the balance is paid off. You should choose a personal loan over a credit card for longer-term financing that you can’t pay off immediately.

4. Use credit wisely. 

Create a monthly budget and stick to it. If you don’t, your credit can get out of hand quickly. Try to end every month with a surplus. 

5. Attempt to reduce your debt.

You can do this by:

1) Selling something you own that you're not using. 

2) Work extra hours or pick up an extra job. 

3) Consolidate your debts.

4) Set up a debt management plan. 

6. Improve your credit score.

Once you’ve settled your debit, improve your credit score by making timely payments, keeping your balances low, and applying for credit intelligently. Each time you apply for credit, the lender will pull your credit score. This “hard pull” will reduce your credit score slightly for about a year. For that reason, you shouldn’t liberally apply for credit.Instead, comparison shop and find the right loan or credit card for you. Then make one application, which will result in one inquiry. Applying for a lot of new credit suggests you are having financial problems. If you’re shopping for a car loan or a mortgage, then it’s okay to have several inquiries. In fact, all inquiries made within a 30-45 day window will count as one inquiry.

As always, we’re here to help at Silver Maple Mortgages. If you have questions about your mortgage or interest rates, give us a call or send us an email! We will do our best to help you where possible.