Learn about Credit and how it Works
By understanding credit scores and how they work, you can manipulate credit to your advantage. Once you have the knowledge, you can take a critical look at your financial situation and credit score. From there you can make a plan to improve your credit.
Understand Your Credit Needs
You need to learn about what you want vs what you really need. If you get credit every time you simply wanted something you can’t afford, it can lead to financial disaster. Limit your credit to things you actually have to have, like a home or car, for instance.
Create a Spending Diary
Use a computer bookkeeping program like Quicken to keep track of your expenses and spending. Balance your checkbook every month using this program. You will see how you’re spending your money and how much income you really have.
Evaluate Your Income to Expenses Ratio
Take a good, hard look at how much money is coming in and how much money you are putting out in spending cash, credit cards, loans, living expenses, etc.
If you are spending more than you are taking in then create ways to cut back on spending. Possibly you can go on a less expense vacation, eat at home more often, purchase clothing from the sale rack, and always avoid buying on impulse.
Live on a Budget
Create a budget and stick to it. Make sure that the budget you create is realistic and it is possible to live on it. If you go too strict then you will quickly abandon it. So, put some serious thought into your expenses and develop a budget.
Only after you are living within your means should you seek out credit options to start building your credit score. Make sure you are living on your budget for several months and are comfortable before taking on new debt to build your financial future.
Learn More about Credit
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