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Creative Credit Course Corrections

by Dave

Credit, six letters that can change your ability to do what you want when you want to do it. Most of the problems that people experience with their credit is caused by a simple lack of understanding of what it is and how it is best used. As a result of this ignorance, many people misuse their credit and end up in a pit of despair and debt that destroys the quality of their life.

The following five tips will help you to avoid common credit problems and to dig your way out of the debt pit.


Tip #1 – Be Aware of Your Debt

A lot of people get into trouble with credit products because they do not realize how much debt they are racking up. To avoid this problem create a list or spreadsheet that clearly identifies each credit product you have and what its overall balance is and what the monthly payment for each of these products is. Post this somewhere you will see it every day.

Tip #2 – Get Rid of the Most Expensive Credit Products

A good way to help get you moving towards a better financial position is to get rid of the most expensive credit/debt products first. For example, if you have three credit cards select the one with the highest interest rate to pay off first. This will free up more money each month to pay down your other credit/debt products.

Tip #3 – Create a Credit Usage Strategy

Another reason why people get into trouble with their debt is that they use it blindly. The credit card is whipped out to pay for everything from movies to doctor bills without thought of the financial impact of these purchases. Stop doing this! Instead, strategize how you will use each credit product so that it produces the most value for your money.

Tip #4 – Don’t Respond to Credit Card Offers in the Mail

It is very tempting to accept the credit card offers that you get in the mail. However, these offers tend to be expensive credit card programs that may offer you an initial no or low interest rate to get you signed up. After three, six or twelve months the terms change and you are now responsible for paying 12 to 25%.

Tip #5 – Set Credit Goals

Instead of using your credit blindly, set goals for how to use your credit to achieve goals. For example, you may strategize a way to increase your credit rating so you can qualify to buy a house. Use your credit for purchases that will improve your financial position, as opposed to hurting your financial position.

Mastering the concepts related to everything about personal finances is a challenge, but one that will produce valuable results.

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