The problem with credit

As an ethical lender, at HB Loans we take it upon ourselves to help educate our clients about credit. Most of them come to us due to the fact that they cannot secure a loan anywhere else. This is down to one thing and one thing only, their poor credit history.

In todayís world, escaping credit is an impossibility. It is up to you to manage it correctly, however. In this article, we pay particular attention to ways to handle your credit, making sure that you donít fall into the trap of a bad credit rating.

Pay the correct amount

Any form of credit that you might have, from a credit card to a shop account will have a minimum payment based on the amount you have spent on that card. This amount is worked out precisely, and for this reason, you should make sure you pay it each and every month, before the stipulated due date. Even missing a payment by one or two days can negatively affect your credit rating. If possible, pay a little extra. This ensures that you can pay off the particular card faster and looks good on your credit report, especially when you are applying for a bigger loan down the line.

Miss payments at your peril

Now it might seem tempting to miss a payment here and there, but our advice is to never do this. This is simply the fastest way to affect your credit score negatively. A missed payment will reflect on your credit report and become a red flag should you choose to open another store account, credit card, try to sign a new mobile phone contract or perhaps apply for a personal loan.

Close the cards and accounts you do not need

Sure itís fun having a wallet full of credit or store cards. The thing is, how many of them do you actually use. If they are paid up and not a store that you tend to shop at anymore (we understand, fashion preferences change), then close the relevant card as having multiple cards on your record does not help a positive credit rating score. This also pertains to credit cards that you might no longer use. This is a great way to show that you a responsible credit user.

In times of emergency do not apply for plenty of loans at the same time

Now when you need money in an emergency and you do not have any form of credit left, make sure you do not apply for loans at multiple institutions. Why? Each application leaves a footprint on you credit record which other financial institutions can see. This constant applying is often a red flag and can affect your credit score negatively in some instances.

Budget properly

By writing up a proper budget covering all your expenses, we can often see where we waste our money. And you will be surprised how much you waste. Now try to curb this wastage and put that money into something more practical such as paying off a loan or credit card early. If you are not sure how to budget effectively, an app can help you. One of the most popular is Monefy which has a range of financial aids.

Get interested in your credit score

Knowing your credit score is the best way to keep debt under control. If you see it dropping, you can act to fix it, while knowing it is perfect can also keep you motivated to keep it at that level. You can check your credit score for free once every year with many companies in the United Kingdom or consider a nominal monthly fee to check it more frequently.