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Do All You Can To Protect Your Personal Credit

Dec 29, 2007
Most people don't set out to be careless with personal credit, but that is exactly what happens. They find it encouraging that they are getting credit card offers and most of us have a get it now and pay for it later exposure. It can be difficult to see others having those things you really want to have too. One rule of thumb to live by is if you can't pay off your credit cards at the end of the month you shouldn't make the purchase unless it is an emergency. This means you don't want to take a nice vacation and they have to pay for it over the next year.

Establishing your personal credit involves much more than just being able to get a credit card or even a personal loan. It needs to be an ongoing process that you continually monitor. You may not realize it, but having access to an excessive amount of credit can hurt you. For example if you have two credit cards with $25,000 of credit on each of them a creditor will look at the fact that you could potentially get yourself $50,000 into debt very easily and very quickly.

A very common mistake with personal credit it using it because you have it readily available. The best way to make sure you aren't tempted is to not even have it accessible. Most people don't realize that the amount of credit you can access can affect your credit score. Some lenders won't give you additional credit because you may access the other credit you have in the process and then not have enough to pay all of your payments. Lenders don't like to get burned and so they take precautions at all turns.

If you work hard to establish your credit, you can also call the shots with lenders. Let that car dealership know that if a 7% rate of interest is the best they will offer you then you will go somewhere else. Of course you can't say this if you haven't been responsible with your credit. The rate of interest is very important as part of your disposable income is going to be eaten away by it. Why give lenders more than you have to? Car loans are often five years and home loans thirty years. Over that length of time the amount of money you can save with a lower interest rate is substantial.

Make sure you have enough money in savings to cover two months of your regular expenses. This way if something unexpected happens you will be able to take care of your payments without being late or getting a bad mark on your credit. It can seem like forever when you are trying to get caught up. You also don't want to have to rely on credit cards to pay for your essentials as the interest will eat you alive.

Take a close look at your savings versus your spending. You need to have enough money in savings to cover your bills for at least two months. Cut back on your extra until you have this covered. You never know when you might get sick or lose your job. Many people find themselves in those circumstances and it drastically affects their ability to maintain good credit.

It does take some education and some self control to be responsible with personal credit. Parents need to really teach their children about this because credit card companies often target college students even though they have no income. In a very short period of time they can have a pile of debt accumulated. Some parents are able to jump in and save them but many can't. Some students don't inform their parents about it until it is too late because they are embarrassed.

No matter how bad you need money you don't want to get taken advantage of by lenders with high rates of interest. They are going to give you what you want but only in order to reap huge amounts of interest from you. This is going to get you into worse situations so just fall for it. You can recover from personal credit mistakes but it is going to take time to prove that you are worthy of a second chance from lenders.
About the Author
About the author: Robert Bain writes about the complicated world of credit. He comments on credit cards, debt relief, credit repair , credit ratings, bad credit cards, home equity loans, travel rewards, cash back offers, business credit and personal finance.
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