Making the right money moves will not only boost your financial security but also help you to secure favorable rates on loans and also give you access to the best credit card deals. But what are the moves that you can make when you are hit by low credit? You can start by building up your savings, paying off all your credit card bills and boost your credit score.
Get Rid Of Credit Card Debt And Loans Completely
All sorts of debts can hold you back financially, whether it is a low interest rate or high interest rate debt. If you have loan payments to make every month or have high balances on your credit cards, then it will be difficult for you to save or invest for your future. One smart move that you can take to overcome it is pay down all high-interest credit card debt and loan first that you may have and then move on to the next debt. It will take time, but eventually it will help you to get on the path to financial security as well as improve your credit score.
Maximize Your Credit Score
Achieving the best credit score is indeed possible. Having a better credit score could help you save money the next time you get a loan or finance a purchase. There are several factors that are considered while calculating your credit score. Your payments history is one of the biggest factors that affect your credit status. So, making payment on time makes it very important. Even a single missed payment will directly hit your credit score. The ratio of credit card balances and ratio of your loan balances to the original principal amount are other factors considered while calculating your credit score. To take advantage of this category, keep your credit utilization ratio low. Another alternative is you can ask the creditor to increase your limit so that the percentage of your credit used lowers down.
The length of your credit history and age of your oldest credit account are other factors that are taken into account. Closing your old account even if you are no longer using it will bring down your credit score. Applying for new credit is another factor that will hurt your score. Therefore, apply for new credit only if you are in need of it. Considering all these factors will help your credit from getting affected further.
Start Your Rainy Day Fund
While you are busy with getting yourself out of debt do not forget to save for rainy day. As an emergency fund you should have at least three months’ salary in your account. How much you set aside every month should be carefully calculated. Consider all your outgoings and monthly income so that you can assess the amount that you can put aside. You can research the different saving and investment options or find investment advisor to find more information.
Consider Health Cover
You need to be honest about the health condition of yourself as well as your family. If your family completely depends on your income then the best way to protect them financially is to get life cover. You will find different types of life insurance. Go through the pros and cons closely and find which one suit you best. Be aware of the deals that will make you pay a large commission over the duration of the policy.
Apart from all the smart moves, take time out to ensure all your money is well deployed and working. Reaching a better position will lessen your financial fighting and lead you to financial freedom.