How to Improve Your Credit Score – Personal Finance Basics

The health of your credit score is incredibly important to your finances for a number of reasons. To begin with good credit scores are exactly what banks are looking for when deciding whether or not they will lend you money. More often than not insurance brokers or landlords often look into your credit when determining whether or not to choose you as a potential client or possible tenant. This article will describe to you a number of ways of improving your credit score and will assist with your personal finance basics.

1. Pay Your Bills On Time

The reason why this is first on my list is because this is likely the most important rule to follow when trying to boost your credit score. If you visit a bank and want to apply for a home mortgage the first thing the bank will search for is if you regularly make bill payments when they are due. These bills include everything from your cable, home or cell phone, credit card or any other types of bills. Your credit score will directly reflect if you pay for, miss or are late on your bills. If they discover that you always miss or are late for payments, there is a good chance they will not approve you for the loan.

Helpful advice so you will make every bill payment:

-Create a new checking account and allocate enough cash at the beginning of each month for your bills so you always have enough.

-Create automated email reminders a few days prior to when your bills are due.

-Create automatic payments through your online banking.

-Keep a written calendar of when each bill is due. Update and check it regularly.

-Purchase everything possible with cash. Not having a credit card means one less bill to forget.

2. Never Let Bills Go To Collections

This may seem very simple but these collection agency’s exist because thousands of people allow their unpaid bills to go this far. You can’t forget about your bills. Your bills won’t just disappear. If just one of your unpaid bills go to collections you will have to pay surcharges, major interest and your credit rating will be tarnished.

3. Keep Credit Card Balances Low

The most simple of personal finance basics is if you must use a credit card, keep the balance at zero or as low as possible. The less of your available credit you use the better. The number that most reflects your credit score the most recent balance on your statement. Even if you pay your bill in full every month you should never exceed more than 30% of your available credit. The less you use the better.

4. Use Old Your Credit Cards

This may seem a bit odd but try not to switch from one credit card company to the next. If you jump around and continually open and close credit cards your credit score can be adversely affected. If you can use the credit card you got when you were 20 and stay with it. If you primarily use a different credit card, attempt to keep your old cards active and use it every once in a while. Make certain you pay it off in full each time.

5. Check Your Scores Once A Year

Credit scores can change fast. One day everything may be going well and tomorrow your credit score might be awful. Looking into your score each year is a personal finance basic tip we all should follow. This will allow you to correct any mistakes that the banks or you might have made. Keep in mind, if you check your credit rating more than once a year or on a regular basis it will affect your scores negatively. Checking once a year is your best option. Be sure to dispute any errors like unpaid bills or late payments when you are certain that they were paid on time or there might be other issues that you could find.

High credit scores create the chance for lower interest rates on mortgages, car loans, personal loans and credit cards. The most simple of personal finance basics you should follow is to maintain the health of your credit score so you will be able to take advantage all sorts of different financial opportunities. The sooner you rectify any issues you might have with your credit, the sooner you will get everything back in order. By following these tips you will be completely on your way to improving the health of your credit score.

Emergency Fund Accounts – Personal Finance Basics

As a financial consultant and I have coached a lot people as to why emergency funds are critical. In an earlier post you learned crucial personal finance basics with regards to creating an emergency fund like budgeting, goal setting and automation. Today I’ll discuss a few quick tips to help you pick where to invest your emergency fund.

Convenience – If you are like lots of people, you want to make saving into an emergency fund as fluent and simple as you can. Coaching personal finance basics has also shown me that if it’s not easy, chances are it won’t get done. You likely have a checking account. If so, you probably have a savings account in place too, if not you could open one with your bank on the Internet or at your branch. I recommend using this account to park your emergency funds. Chances are the interest rates aren’t great, but it’s an a simple account you probably have, or you could set up in a jiffy.

High Interest Savings – You shouldn’t worry too much about the interest rate you get with your emergency fund as it’s considered a short-term investment. A personal finance basics way of thinking is that you’ll probably use the fund within the next five to seven years, it’s short-term. ING is avery popular savings vehicle, as is PC in Canada. There are plenty of high interest savings accounts available to create online, just be careful of their fees, terms and conditions and legitimacy. Money market funds is one other choice, and can even provide higher interest than savings accounts, but they aren’t guaranteed. I have personally used ING for my emergency fund and think its excellent.

Liquidity – How quick can I get my money? Another important factor you need to think about is how accessible are your emergency funds. The simple rule with this is that it should be available by less than five days at the very most. You should try to get a fund that could pay out your money within 24 hours of when you need it. The personal finance basics question to ask yourself with this when choosing an account is “Can I get the money when I need it?”

I hope these personal finance basics regarding convenience, high interest savings and liquidity will help you make your emergency find into a reality. Check our resource link for free budget spreadsheets and other financial calculators to give you the head start you may need. We go more in depth in our e-book as well. The best tip I can give is to get it started. Even if you only got a 0% rate of return, you will still have money tucked away for those unexpected expenses that you wouldn’t have otherwise.

Electricity Saving Tips – Personal Finance Basics

Don’t Let Your Electric Bill Zap Your Budget

This post will focus on your electric bill. Electricity can be one of the biggest expenses that you will discover as a home owner. Here are a couple of tips that will help you be more energy efficient in your home. I will go over the personal finance basics regarding one of your larger utility bills. Hydro bills can be very high in the summer, with air conditioners raging. If you’re in the north and use baseboard heaters, you will discover that hydro bills skyrocket in the winter as well. Here’s 3 tips to help reduce your hydro bill.

Are You Using that Computer? – I work at a place where the computers are always on. They don’t even get turned off on the weekends. A little research in personal finance basics will reveal that a computer uses as much electricity per hour than a 14 watt compact fluorescent lamp for a full day. My work’s last hydro bill was $700 for one month. They could lower their expenses by at least 27% by switching the computers off for evenings and weekends.

Is Your Home Energy Efficient? – Easy tasks like putting a plastic heat barrier on your windows in the winter can significantly lower heat waste, and for goodness’ sake, keep your door shut. Ever heard your parents say “I’m not paying to heat the outside?” Sounds like they understood a common sense thought to personal finance basics. find other ways to make your home more energy efficient. You’ll not only leave less of an environmental footprint, but you’ll save tons on hydro.

Sometimes I Swear We Live in the North Pole – When you are looking to further your practical skills in personal finance basics one way is to look at how much energy your air conditioner consumes and reduce it if you can. For instance, try to use a fan instead of the air conditioner. Another excellent way to reduce consumption is by setting the thermostat up by 2 degrees. With heating for example, if you lower the heat by 2 degrees you can reduce the home heating costs by 5%.

I hope you’ve found these tips useful. I’ll mention it again, that as a financial consultant I teach a lot of personal finance basics to people looking to reduce living expenses. It’s important to maintain a comprehensive budget so you know where your living expenses are and to motivate you on ways to reduce those costs. If you haven’t searched Google for budget tools yet, you can now, or try the one in our resource link. See you in Part – 4.

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Personal Finance Basics – Is Consolidating Your Credit Card Debt Worth Doing?

You have probably heard about or seen advertisements about how consolidating your credit card debt can help you by reducing your monthly repayments. Therefore, you will be better off, right? Personal finance basics, that is a basic knowledge of personal finance, will tell you – maybe. It works for some but it will not work for others. So to benefit you have to know which is which. And even if you realize consolidating your debt is not for you, then you will benefit. Because you now know more than you did before about your personal finance and you did not allow yourself to get into a worse situation.

The whole principle of consolidation your credit card debt is to have all your debt in one place to take advantage of lower premiums. Lower premiums because you can take advantage of better interest rates.

But consider this; often you will have to take out a personal loan to consolidate your debt. But, because of the nature of personal loans, there will be a definitive term for the loan, unlike credit cards, where, if you make minimum payments, you can extend the loan term in exchange for smaller monthly payments.

It is usually a bad policy to always make minimum payments on your credit card debt. But, there are situations where it can be beneficial to you. Perhaps your budget shows you can increase your payments after a couple of months. So, as a short term measure, short term means months not years, this facility could be very useful.

Remember that lower rates may not mean lower monthly payments. If you consolidate your debt through a personal loan you will have a definite term to pay off the loan. So, it could mean your monthly payments are increased even though you are taking advantage of lower interest rates.

An advantage, not to be overlooked, of consolidating your credit cards debts, is the fact that you will have only one repayment for your debts each month. This does make budgeting a lot easier and will reduce the chance of you forgetting about a payment and thinking you have more money to spend than you should.

One other thing you must remember is consolidating your debts is a method of improving your financial position. It most definitely is not a method of having more money to spend each month. You must strongly resist taking any additional money you get and spending it. You must use this money to repay your loans faster.

You should always be looking for ways of improving your personal finance basics. Make sure you understand how your credit cards work and make sure you have a budget you can work to.

Personal debt can be debilitating and needs to be dealt with

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