Credit Cards For People With Bad Credit – 3 Tips to Improve Your Credit Rating

In the current economic environment many people find themselves struggling financially and running up debt. Below are three tips on how to best use credit cards for poor credit risks.

1. Budget. Writing out your income on one line and then subtracting all your expenses will help you to understand how much money you actually have left over at the end of the month to spend on things like entertainment and clothing. Just because you have credit available to you does not mean you can afford to spend to that level. Ultimately you still have to pay off that debt.

2. Pay off more than the minimum balance. If you pay only the minimum balance on your credit cards you will be paying interest on the items that you are purchasing. If you have bad credit, the banks will charge you a higher rate of interest.

3. NEVER skip a payment. If you find yourself in the position of not having money at the end of the month, you can contact your credit card company and work out some type of payment schedule with them. If you skip a payment, you are in default. This will negatively impact your credit rating; you will incur a penalty charge which can be quite substantial. Also, when you are late in paying your bill, you are in default of the terms of your agreement and the bank can substantially raise your interest rates.

The third tip listed above is really important. If you happen to skip a payment, it will really hurt your credit score and make it much more difficult for you to secure financing in the future. Think of it this way, if you just hold back on unnecessary expenses, it will be much easier for you to satisfy your short-term obligations. By satisfying those short-term obligations,you will be able to keep your credit score in good standing, By keep your credit score in good standing, you will have a good credit score which will allow you to borrow money in the future when you need to. You will also be able to borrow that money at lower interest rates, thus saving you even more money. So listen to this advice and reign in all of those unnecessary expenses. You will be glad you did.

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Source by Buck Coddington