Managing your credit: What you need to know

Credit is something we discuss a lot, not just during Financial Literacy Month, but year-round. That’s because managing your credit is one of the most important parts of our financial well-being! Without credit management, it’s hard to achieve financial goals, and it limits financial independence. Today, we’re going to discuss how you can best manage your credit, and what you can do if you’re struggling with it. Here are some things to keep in mind!

Keep your usage at the right level

Managing your credit involves proper credit utilization. Generally, the best credit utilization is around 30 per cent, meaning you’re using 30 per cent of your available credit each month. At this amount, you can establish a clear pattern of how you spend money and make your payments. However, you’re not using so much credit that it seems like you’re always on the verge of maxing out your card. Using too much credit can appear as though you have a hard time controlling your spending. Using too little credit won’t make your credit score drop, but it won’t help it to increase either, if that’s your goal. There needs to be a clear pattern of your habits in order for your score to rise, so striking a balance between using too much and not enough credit is essential.

Pay more than the minimum

If you can do it, paying more than the minimum amount on your credit cards will help you manage and maintain your credit score, and even improve it. It proves you are more than capable of repaying your debts and you aren’t just scraping by. Your payment habits make up a big part of your credit. It’s not the end of the world if you are only able to make the minimum payments, but increasing your payment amount will keep you in a good position credit-wise. 

Pay on time

A big part of managing your credit involves making all your payments on time. Most of us have let a payment slip through the cracks before, and while it doesn’t mean your credit is destroyed, making it a habit will certainly have a negative impact. Make a conscious effort to pay those bills by the due date, even if it means only making the minimum payment amount. Late and missed payments indicate you’re struggling with your credit, which will reduce your score. Do your best to avoid this!

Struggling to manage your credit?

Sometimes, you just have a hard time managing your credit. It happens to most of us at some point! Your credit score might be dropping and you’re not sure why, or you may be well aware why, but you don’t know how to fix it. While there’s not one simple trick to fix everyone’s credit concerns, here are a couple suggestions to guide you in the right direction.

Set payment reminders

If you’re late on payments and it’s just a matter of poor memory or organization, the good news is that’s a fairly simple fix. Life is busy, so don’t feel too bad if you’re not the best at remembering to pay the bills. Setting up payment reminders is a quick and easy way to combat this issue. You can use your phone to set up notifications or alarms. You can also use Google Calendar, or you can download an app to help you out. Whatever is most convenient and accessible for you works! If you have the option to set up automatic payments, that can also help as it will reduce your need to remember to make payments manually.

Don’t ignore any payments

Managing your credit when you’re struggling is scary, but don’t hide from your payments. Sticking your head in the sand will only make matters worse, because your bills won’t stop rolling in. You also shouldn’t just choose one debt or bill and put all your efforts into paying that off, while neglecting the rest. Even if you’re tackling something with a high interest rate, it will still cost you more to ignore your lower rate payments. It’s better to make the minimum payment on everything than to not make a payment on anything.

Speak to a broker

If you’re a home owner and you feel like managing your credit isn’t something you can do alone, get in touch with a mortgage broker. Owning a home can make it extra scary to be sorting out your credit concerns, because you don’t want to put your mortgage in jeopardy. As brokers, we understand the importance of your home and we can help you create a plan that takes your mortgage into consideration. This might mean a refinance or renewal, if you are able to save money by rearranging some terms of your mortgage. Debt consolidation is another option we can look into if needed. If your credit is in danger because of debt, we can work with you to find the solution.

Managing your credit requires you to make a conscious effort to pay your bills, maintain the proper credit usage, and be timely with your payments. If you’re finding it difficult to handle the many moving parts of maintaining your credit, that’s when a mortgage broker might come into the picture. We can work with you to help you understand your options, and how you might be able to use your home to your advantage if debt is affecting your credit.

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.