Posts Tagged ‘credit score’

Is Some Debt Good For Your Credit?

Monday, January 19th, 2009

Does debt improve credit?

There is no doubt about this, first of all: Getting into debt is more than capable of getting you into trouble. Although there is definitely a large downside to debt, borrowing money can also do you some good. Some debt is actually good for your credit, but only if you understand why, and how much debt is good in comparison to when your debt has become too much.

With the help of credit, you can achieve some of your financial goals. Debt allows you to take advantage of experiences and opportunities that enhance your life, like buying a car or purchasing your dream home, going to the best school or taking a cruise around the world. Getting the true value out of your credit has to do with developing a spending plan that allows you to get there in the time frame that you have set, without ruining you financially.

With the help of credit, you can send a message to potential lenders. If you have never had any debt, then you have never used credit before and will not have a credit score or a credit report to speak of. In today’s world, however, it is difficult if not completely impossible to live without credit, because credit is vital for purchasing most big ticket items, like higher education, vehicles and homes. Credit is also heavily relied upon for the purpose of preparing for life’s emergencies. For all of these reasons, having a good credit reputation is going to show potential lenders that you are a good and healthy credit risk by showing that you can handle a little bit of debt. By showing your capability to repay debt, you can put yourself in a good position to attract creditors offering favorable terms and rates.

Credit and debt are also capable of giving people a sense of how responsible you are. If you had no debt or credit history, you would find yourself being disadvantaged in other ways. Should a prospective employer check your credit record and come up empty for example, they may find this strange, and not want to hire you. Without a credit record, employers, lenders and other individuals lose out on a potential way to appraise who you are. Debt and credit are important for getting an apartment, applying for car insurance, buying a home, even sometimes renting a car. Even if you can afford to do some of these things, using debt and credit to create a history of how you handle money is an advantageous option in favor of just using cash for everything. Credit is not only a tool for extra income, but it is also a way to show lenders, employers and other individuals how responsible you are when it comes to borrowing, spending and repaying your money.

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Personal Budget Planning

Monday, January 5th, 2009

Add budgeting to your personal finance repertoire.

The key to your financial success in life is your own personal money management skills. Your personal money management practices make up your own personal method of reaching both your goals and your dreams. No one likes the idea of personal budget planning, but you will never know if you are getting the most out of your money if you do not implement some techniques for personal budget planning into your life. Everyone wants to keep up on their bills, pay off loans and credit cards, and stay ahead of debt. Successful asset and debt management is an excellent source of pride as well as good credit.

Whether we use credit or not, all of us want to have a good credit score and credit report. So unless you have an unlimited amount of money that you can simply spend in any way that you wish, you are going to need to formulate some semblance of a personal budget in order to get your bills paid and in order to manage your assets as well. Personal budget planning can seem difficult, but should not be an overwhelming process by any means.

Creating a household budget begins by figuring out what all of your monthly and yearly bills are. Then you are going to want to add in any retirement funding, savings goals and spending money so that you have a clear cut picture of how much you need to spend, because what doesn’t matter is how much money you make – what does matter is how you spend the money that you make. By implementing personal budget planning techniques into your daily life, you can get a feel for how what you make relates to what you spend, and how cutting down expenditures in certain areas of your life can actually help you save a significant amount of money.

When you fail to follow personal budget planning, your debt may overcome your income, meaning that you would be unable to make payments on time. If you make payments late or make no payments at all, you will put yourself in serious mounting debt with no way out. You cannot simply spend money as you wish and hope that there is enough left over at the end of the month with which to tackle the bills. You absolutely must implement techniques for personal budget planning if you want to manage your finances right.
Personal budget planning is actually quite easy when you consider how many resources are out there for it. Most people use budgeting software on their computers to prepare a household budget. If you do not have any fancy software, another opportunity is simply to use excel to track money in and money out. When you have a clear cut picture of where your money is going, that is when you can truly begin to implement smart money saving strategies to get your finances on track.

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