Breaking the cash advance dependency is a good start to healthier finances. This is one rule of many which is meant to be broken. Relying on any type of third party money source would never be the most cost effective approach to budget planning. If you are looking to have good credit, there are some rules (10 of them actually) which should never be broken to support healthy credit.
- Pay your bills on time! We are talking consistently, every month, year after year. When there is a solid payment history to fall back upon, larger debt ratios tend to be more forgivable.
- Know what your credit score is, watch it, but don’t hover over it. There are three major credit bureaus which each offer one free report every twelve months. Spread these out to track your credit three times a year. Look what is no your report and take action against anything which should not be on your report.
- Most people will see financial trouble brewing, so don’t pretend it doesn’t exist. A proactive approach to money problems is to take it head on. Call your creditors and work out possible payment arrangements before the creditor is affected.
- Keep your personal information safe. Take measures into your own hands by shredding financial documents properly. If you are using your computer and/or online banking make sure you include virus protection software. Take measured steps to minimize identity theft and fraud.
- Refrain from closing credit cards, especially if you have a balance owed on the account. Your credit utilization ratio will change which will negatively affect your credit score.
- Your credit utilization score compares the debt amount to available credit. Maxing out credit cards or home equity loans is going to lower your score. Try to keep your balance at 30% or less to make debt less damaging to your credit.
- Limit the amount of new credit applied for (a short-term cash advance is not included in this key point). Each time a new creditor checks your history; your credit will be knocked down a point or two. Doing it often those few points will add up quickly as well as make it look to new creditors that you may be desperate for money. It will take a year or two to earn those points back, take it slow and give time in between applications. Find out why your application was rejected and work on that aspect of your credit history before applying again.
- Do your best to pay down your debt. If you can afford it, don’t just make the minimum payments. You will save thousands of dollars over the long run.
- Be smart with credit cards. Pay them off or down below 30% of the available balance and rotate usage. Use them responsibly. The credit bureaus will not be able to efficiently monitor your credit management unless there is activity within the lines of credit.
- Create a budget according to your income. Break costs down into categories and filter payments into each of them. Include a savings category and one for “other” costs. The cost of coffee shop splurge will need to come from some budgeted area. Make the plan and stick to it.
Use cash advances wisely and limit repeated usage.
Limit your spending and make solutions cost effective. If you are going to use a cash advance, make the payoff as soon as you can. Use credit cards with lower interest and payoff those with high interest. Reward yourself for a job well done. It is great incentive to keep your credit healthy.
