Wednesday, February 27, 2013, AM | 2 Comments
Before accepting your application for loan which also includes issuing you credit card, many banks these days research about your past behavior handling your finances. There may not be anything wrong with it. It’s the lenders’ money and they want a good return on it.
Lenders try to understand how you have dealt with your money especially the loans you may have received before.
Many experts believe that identifying the psychological causes behind many of your financial decisions, you can change your behavior in ways that will ultimately put more money in your pocket, contribute more in 401(k) or contribute to IRA to its maximum allowed by law.
Forget the mambo jumbo of psychological reasons – leave it to the experts – take the following simple steps to take control of your financial present and more importantly your financial future.
If you can’t pay your bills, Credit Counseling is the best route
Are you living your financial life from paycheck to paycheck. That means when you receive a paycheck, you spend it all and by the time you receive another paycheck, you have nothing saved from your previous paycheck.
If you feel even that is not enough, you start borrowing and you keep borrowing. You must stop doing that and try to live within your means whatever those may be.
You must take action immediately if your borrowing is getting out of hand. Sooner than later, you must contact your lenders to develop a workable repayment plan.
Most often, credit card debt is the problem. If that’s the case, stop using them or even cut them up but don’t close the account with the issuers.
I believe in do-it-yourself ways but if you cannot do it by yourself, find a good credit counselor. They are not too expensive – to the tune of $20 a session – and you can find one locally in your town.
Be interest rate wise when borrowing
Interest is the backbone of modern economy. We all know that. However, what we don’t realize is we accept any interest rate that the lending institutions shove down our throats.
The excuse usually is that our FICO credit score is low and that’s why the interest rate is higher.
Credit score and interest rate are inversely proportional. The higher the score, the lower the interest rate and vice versa.
It’s obvious you must somehow raise the level of your credit score in order to get lower interest rate. We all have no choice but to follow the existing system. We all must try to beat the lenders at their own game.
In this endeavor of beating them, we might not be able to succeed 100% but we must try.
It’s pretty hard…
No one has the 100% fool-proof solution. However, we must have control over spending resulting in more saving. The next step is to grow the saved money. You can do that by creating a long-term portfolio of diversified stocks, bonds, mutual funds, etc.
In a Nutshell
If you are on the verge of getting into debt, feel it, realize it immediately so you can talk to a good credit counselor.