Repair Your Credit | Taming the Credit Monster (Pt. 2)

Charging Purchases

Welcome back.
CLICK HERE if you missed part one of this article. Use installment loans and instant payday loans only when necessary. You can cut the cord on your dependence upon borrowed money and repair your credit starting right now!

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Not long ago, we all dealt in cash. If you didn’t have enough for what you wanted to purchase, you simply couldn’t buy it. It was that simple. Today, there are too many credit card options like Visa, MasterCard and Discover. If we don’t have any plastic, we can draw some quick cash from a local brick and mortar or online payday loan store.

We’ve come to enjoy the convenience of credit and fast cash, and they can in fact be used responsibly. However, as you probably already know, discipline and responsibility are typically lacking in consumers because it is relatively easy to come by personal credit.

If you use your credit card for all your monthly purchases, you’re asking for trouble. At the very least, you must be sure that you do not go over the limit and – if you truly want to repair your credit -  that you do not charge more than you can pay in full each month. This may prove difficult, and I would suggest that you’re much safer using your addition and subtraction skills in service of your checking account, spending only what’s there and making a habit of saving. You can see a remaining balance in your checkbook register (online or on paper), so you’ll know how you stand and won’t be as tempted to flash the “magic” plastic.

Thanks to the world of online banking, there are tools to help you burn through your available credit. One is E-mail reminders that can be set to notify you when you are approaching your limit. By all means, set such notifications to automatically hit your inbox, but DO NOT rely upon them. There will inevitably be a delay before your bank issues the E-mail, so you really have to know where you stand before you make each and every purchase. It’s the safest way to use credit cards (if you must do so).

Paying Off Credit Accounts

When paying off credit card debt, many try to pay off the lower balance cards first. It’s a psychological game we play to make our progression to financial freedom feel faster; in reality, we should pay off the higher interest cards. So if the interest rates on these lower balances are the highest of your credit accounts, you are on the right path. Highest interest rates will cost you the most over time.

One of the worst habits that will lead you into debt quickly is putting things off. Being habitually late on payments add late fees and charges to your already existing balance, but even more damaging over time, it will raise the interest rate. If the existing balance in the account is big, this could cost hundreds of dollars in interest before you get it paid off. And couldn’t you use that extra money for something more important?

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