Credit Rate Yourself to Know Your Financial Health

Has the recession and its adverse effects on the economy shrunk your wallet? Does inflation coupled with news about layoffs and pay cuts make you sit up and worry about how you will handle a sudden cash crunch? If the answer to these two questions is a yes, then this article is for definitely for you! The best thing to do at a time like this is to do a credit rating on yourself, figure out where you stand and how equipped you are to deal with a sudden financial crisis.

How frequently do you make a purchase using credit cards?
Are you an impulsive buyer? Do you charge your credit cards to buy items that you do not require and do not have the cash to pay for? If you answered yes then you can get into a debt trap very quickly and without you realizing it. It is time to check your spending and do a self credit rating.

Have healthy spending habits
Use your credit cards wisely. Make a charge only when you buy an item for which you already have cash to pay for but want to build a healthy credit history and for unforeseen needs; or, in other words, emergencies. Whatever the reason was for using the card, make sure to pay off the card balances on time to avoid interest charges. If you are in the habit of paying only the minimum amount then you're not reducing the actual balance on your cards and will end up paying interest on balances. And because the minimum amount is so much less, it could take years for you to pay off the balance.

The next time you go shopping make sure to leave your cards at home and carry them with you only when it is absolutely necessary. Buy only those items that you really require and have the cash to pay for. Making a regular payment on time for your cards will help you maintain a healthy credit rating with the banks. Paying just a little more than the minimum amount can make a big difference.

Setup a credit card repayment plan
Are there huge outstanding balances on your cards? Don't worry. You can still pay them off by setting up a realistic repayment schedule and sticking to it. You can consolidate your higher interest card balances into your lower interest cards. With a little self discipline and controlled spending you can pay off the card balances sooner. Once you do pay them off, make sure you limit the number of cards you hold and cancel any old cards to eliminate any temptation to use them again.

It is not wise to avail a secured load to pay off your cards. The simple reason being that if you take the loan and still not pay the balances or start accumulating balances you will only end up doubling your debts. If you get a secured loan by placing any of your assets as collateral and not pay the cards, you will only end up losing your assets.

A self credit rating will act a good pointer to your financial health and will be a real wake-up call in this turbulent economy. Using it can help you take corrective action to set it back on the right track. Good Luck.