Four to eight is the average amount of credit cards typical consumers own. Average debt stemming from these credit cards is just over 15,000. Many people are stuck in the revolving cycle of debt each month as they use cash advances to pay for other costs. Living paycheck to paycheck will trap a person into sup-prime credit and therefore hurt future financial opportunities.
Educate yourself on cash advances and credit card debt.
Educating oneself on budgeting, credit cards, cash advances and debt will only promote a better financial outcome. Knowledge will not change your credit score, but it will empower you to change it yourself. How can we change misconstrued thoughts on credit? For starters, the more we read or talk about credit and debt, the more exposed to the subject matter we become.
- Some people are afraid to check their own credit reports. The credit bureaus want people to check their credit which is why they created a website for free annual reports. Checking your own credit is considered a “soft” inquiry and will not hurt the score in any manner. In fact, if you find errors on the report, you may be capable of raising the score. Each of the three top reporting bureaus will allow one free report every 12 months. When staggered, this will give a person free access to their report three times a year. Stop fraud, clear up reported errors and keep abreast of your own finances.
- Credit card companies do not control your credit score. They are not the final authority on what gets reported. If at any time you feel that there is an error in what was reported, you can dispute the report. The credit bureaus have a protocol to follow when disputing and will promptly resolve problems. Only you can control your payments towards the credit card companies and keep negative reports from making it to the bureaus. The ultimate control over finances belongs to the debtor.
- When a credit score is sub-prime, all a person can do is to wait till the negative falls off in order to increase the score. Seven years is a long time to wait around and do nothing. Maintain on-time payments and work at lowering your debt. Improving the credit utilization rate which compares how much you owe against the sum of credit limits. Keep the credit cards active even if it is only a few dollars spent on them each month. Rotate the cards from month to month and payoff any additional purchases as well as shrink prior debt.
- Using a debit card will not help your credit. It will strengthen bank accounts credibility. This will come in handy when applying for cash advances, but it will not affect credit card applications. Since the money from a debit card is directly pulled from your bank account, it has no connection to credit reporting.
- You do need to have some debt in order to build a credit report. Without any debt, there is no credit to report on. People who tear up all their cards and only use cash end up hurting their score. It does not mean you have to mismanage or charge outrageous costs to get good credit. It’s all about balance and good money management.
Manage your finances according to your income and your lifestyle. Don’t rely on credit cards or cash advances in order to pay for extras beyond your income’s capabilities. Talk about money, credit and strategies used to manage them. Open conversations may lead you to an improved financial future.
