Monthly Archives: February 2013

Credit rating: For mature audience only

A US credit-rating cut would  raise the nation’s borrowing costs by  increasing Treasury yields by 60 to 70 basis points over the “medium term. The average American may not care. But the truth is, American households are dealing with plenty of   their own problems, and the debt issues weighing down the nation are similar to those facing consumers.

An individual’s credit score, along with his credit report, affects his or her ability to borrow money through financial institutions such   as banks. The factors that may influence a person’s credit score are:

  • ability to pay a loan
  • interest
  • amount of credit used
  • spending patterns
  • debt

Your credit score serves as a key determinant of the costs of some of the most   important and substantial purchases you’ll make–like buying a home or car–as   well as the interest rates that accompany your credit cards. Damaged credit can   affect how much you pay for services such as insurance, and some employers even   look to credit histories before extending job offers.

The best way to improve your credit score is to pay down your revolving (or   credit card) debt, because having a high balance/credit limit ratio doesn’t bode   well for your credit score. If you have a card that is close to being maxed out,   consider transferring part of the balance to other cards. That’s because it’s   generally better to have smaller balances on a few cards than a big balance just   on one. Also keep your charges to 30% or less of a card’s limit; 10% is ideal.   If you’re having trouble sticking to the limits, set up e-mail or text alerts   with credit card companies to let you know when you’re approaching a limit   you’ve set.

Banks have been forced to write off record levels of credit card debt, so things are going to get rougher. So make sure you pay your credit card bills in full every month and on time. Late payments will lower your credit score and may even trigger an automated increase in rates. Moreover, it could result in a vicious cycle of credit-card debts.

Most people tend to look for credit cards that give you tempting rewards like travel incentives, or discounts at expensive restaurants. But most of these perks are not your regular bills and payments. Unless you fly often on business trips, travel rewards are aimed at getting you to spend more. Choose credit cards that comes with discounts to your regular bills, like gas, groceries, regular payments, things that require you to pay regularly.

Never use your credit cards to pay for debt. The debt amount will just keep mounting. Many   people justify indebtedness with the thought that they are making an investment   when they purchase items. That’s an unwise assumption. And don’t apply for new credit cards you don’t need.

The Bible does show many ways to overcome any financial crisis and reach financial freedom. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can  download the Small Groups kit from our Store.

Bottom Line

If you haven’t already done so, check your credit report. And make sure you clean your credit cards.

The Bible does show many ways to overcome any financial crisis. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can  download the Small Groups kit from our Store.