Another new year has arrived, promising fresh beginnings and resolutions. It would be wise to set financial goals for the year and other plans.
The pandemic has taught us the necessity of financial stability to act as a safety net during uncertain times. We need to plan everything out, especially our financial goals.
So here are five credit resolutions you need to have this year:
- Make credit cards your best friend.
- Reduce your debt.
- Start borrowing responsibly.
- Pay credit card bills.
- Keep a regular Credit Score Check.
Make credit cards your best friend:
When someone hears the word credit cards, the only thing that flashes before their eyes is the word debt trap. Credit cards can be risky if you misuse them, resulting in a pile of credit card bills, ultimately leading to debt. However, if you use it wisely, it can also be beneficial.
Credit cards have a lot of benefits like discounts, EMI, interest-free periods, reward points, and many more. Proper usage and timely payments can help you yield maximum profits.
Reduce your debt:
This is for people struggling with credit debt. There are only a few ways to reduce the burden of credit loans.
- Reducing the quantum of debt: Repayment is the first and most obvious way to reduce debt. Pre-payments can also do it.
- Reducing the cost of debt: You can also reduce your debt by balance transfer and taking a low-cost loan. Taking a low-cost loan can help you reduce the interest for a high-cost loan.
Start borrowing responsibly:
Credit cards have a lot of benefits, but only if you use them responsibly. Unnecessary loans and borrowing can result in several problems. A person should always borrow the amount they can repay, even in a time of crisis. Sometimes repaying the EMI may seem easy in the present but can become problematic during a time of crisis.
Pay credit card bills:
A credit card can work conveniently only when the entire outstanding amount is paid in full. The credit card works on revolving credit which means that a credit limit is replenished once you pay off the debt. If you pay the complete bill before the due date, you won’t have to pay any interest. Credit card debt can be the most expensive debt. If you can somehow pay the total amount, you will have to pay 36-45% interest per annum.
Keeping a regular Credit Score Check:
A good credit score can help save interest money. You can improve your credit scores by paying off your credit card bill every month.
Using a credit card regularly and paying off the bills every month can result in good credit scores and rewards.
If you are looking for a loan, checking your CIBIL Score is critical. CIBIL is a 3-digit numeric summary of the credit history, rating, and report of your credit score.
Credit scores range from 300-900:
- 300-579: It is considered to be really poor. Scores like these can make the bank cancel your application.
- 580-669: These scores are considered fair, and banks could consider your loan application.
- 670-739: This range is good; it can make the bank pass your loan application.
- 740-799: This score range is considered to be very good.
- 800-850: This range is excellent. You can easily apply for a loan, and no one will cancel your application.
A good score can impact your loan and credit card approval chances. It also affects your job application as these scores are an essential part of an employee’s background check. If you keep these points in mind, you can quickly get a loan and have financial stability. Credit cards can be fun if you know how to use them the right way. So these are the five credit resolutions you can have this year for financial stability.