Tips for Keeping Your Credit in Check
Tips for keeping your credit in check from your Trusted Mortgage Knowledge Professional
As the Christmas-spending bills are starting to roll in, are you wondering to yourself how you can keep your credit in check in 2017?
Whether you’re looking for a job, buying a new car or shopping for insurance, it’s always a good idea to review your credit report and ensure everything is in order. Whether the information in your report is accurate or not, any negative information can cost you – in the form of interest rates on loans. When it comes to your mortgage, this could end up costing you thousands. So, what should you do to keep your credit in check?
Keep track of your spending
While your daily purchases may appear small and insignificant, they can add up over the course of a month. It is important to keep track of everything, including:
- Cheques you’ve written
- All receipts from debit and credit card transactions
- ATM card usage
Review your monthly statements and report any discrepancies immediately.
Don’t exceed your limit and keep your balances low
Limit – Outstanding Balance = Available Credit
It is best to keep your balance contained within 30% of your limit, in order to maintain a good credit score. Charging more than 30% is potentially negative, even if you plan on paying off the balance when your statement comes. Why? Credit card issuers report the balance of the account when the statement closes. If the balance is high, your score will be affected, even if you pay your balance in full.
It is also a good idea to follow the 20/10 rule. By following this rule, you ensure that your debt never exceeds more than 20% of your total yearly income after taxes. Also, each month you should not have more than 10% of your monthly paycheques going towards credit payments.
Have an emergency fund
It is a good idea to keep a 15% cushion of credit available in case of an emergency, such as a loss of income or an unexpected expense. That way, you do not have to borrow more than you’re comfortable repaying.
Pay the amount you owe
If nothing else, pay your minimum monthly payment on time every month. By paying more than your minimum, or better yet the full balance owed each month, you will reduce the hefty interest charges associated with late payments.
DO NOT skip any payments.
Make timely payments
Making timely payments is the best way to establish yourself as a good credit risk to lenders. While certain bills do not get reported when you pay on time, they could end up on your credit report if you fall behind.
- Put all your bills in one place so you do not lose them or forget about them
- Make a list of bills that are due and the date that they are due
- Make payments a week before the due date
- Or, sign up for automatic payments
- Keep your contact information current
If your debt is getting out of hand and your numerous high monthly payments are making it difficult to meet all of your obligations, contact your local Tri-Cities Mortgage Broker, Milka Lukacevic of the Mortgage Centre TMK team.