According to the American Bankers Association, 50% of Americans feel stress over credit and debt. Let’s take a look at how to avoid the stress while building or managing your credit with confidence.
Don’t Use More than 30% of Your Available Credit. Here’s an example: if your available credit on all of your credit cards and/or other forms of credit add up to $10,000, you should not use more than $3,000 of it at any time. If you exceed that limit, it can damage your overall credit and cause you financial stress.
Pay More than the Minimum. Making the minimum monthly payment will never help you pay off your credit cards. Instead, pay enough to cover interest and some of the overall balance. If you can, pay the entire balance for every credit card every month. Additionally, make double payments on your car loan(s) whenever possible. Doing so can help save you money and can give your credit score a slight boost.
Think of Credit as a Convenience, Not a Financial Necessity. Your credit cards and other forms of credit should never be a budget safety net. Use cards for purchases that are already part of the budget and then pay the full balance (if possible) at the end of the month. This strategy can save you money in interest charges, reduce financial stress, and help improve your overall credit score.
Always Pay On Time. When building credit, paying your bills on time is vital. If you miss a single credit payment, it can negatively affect your overall score. Miss too many payments, and the calls from creditors can also cause significant stress.
Carefully Consider All New Credit. Before you apply for a credit card or other credit, think carefully about it. Do you really need more? Too many open accounts can reduce your overall credit score. That available credit can also be a temptation, leading to too much debt usage.
Boost Your Financial Wellness
More Financial Wellness Matters blogs on topics ranging from financial self-care to protecting your financial health are coming soon. Twice a month, we’ll dig a bit deeper into the relationship between financial health and overall well-being, shedding light on the behaviors and beliefs that drive money relationships. With simple tips and proven insights, we hope to enhance your financial well-being and help you live a healthier, happier life.