Credit Counseling - A Few Ways to Manage Credit Effectively
This century belongs to consumerism.
Every day dreams are being sold and people chase to turn those dreams into reality even if those are beyond their means.
Be it the brand new mobile phone launched or cars or even houses; everyone wants to get hold of their shares and hence the need of credit arises.
Taking credit is not bad but taking it beyond the repayment capacity, certainly is.
Here are few ways on how to manage credit effectively.
The best way to take credit is to take it keeping in mind the repayment capacity in mind.
One must ensure the EMIs or the Equated Monthly Installments can be paid even after meeting all the monthly expenses.
If an individual has got surplus funds, it's best to prepay a part of the credit taken.
It will decrease the interest burden as well the principal amount.
But some financial institutions charge a penalty for prepayment.
One must check it out.
It is not at all advisable to take credit from multiple financial institutions as it will become difficult to keep track of them and most importantly to manage them.
It is good if an individual doesn't take more than one credit card or personal loan.
As it will bind them into a net that they will find hard to get rid of.
A secured credit is always better than an insecured one as in case of the former, the security given takes a lot of burden off the borrower and reduces the risk of default.
Every financial institution keep track of every borrower through credit rating agencies.
So defaulting in payment can result in freeze of future credits or a poor credit score.
A credit score is a score given to individuals based on their payment record or credit history.
The better the payment record; the better is the credit score.
One must take credit if you are absolutely sure that you can pay off the credit taken comfortably.
If not then do make sure that the installments are paid in time.
Before taking credit, one must check the rate of interests charged by various institutions and likewise avail the most cost effective one.
Monthly savings must never be compromised as they will create a parity between assets and liabilities and can also pay off the liabilities if needed.
If in case, repayment of the credit taken becomes impossible, then approaching the bank or institute is a better idea as they may chart out a more convenient way of repayment.
One can do the same in case of a job loss or layoff.
Instead of hiding the fact it's better to come clear on that.
Financial institutions can see the case differently and with kindness.
Certain credits like education loans, housing loans do offer tax benefits.
But one must remember that personal loans,credit cards or car loans don't fall into into this category.
Irresponsible credit intake is like intake of alcohol.
Sometimes it becomes compulsion and then it's hard to get rid of it and hence it destroys everything in return.
So one shall take credit with responsibility, pay it back in time, have a good credit score and prosper towards financial security, stability and happiness.
Every day dreams are being sold and people chase to turn those dreams into reality even if those are beyond their means.
Be it the brand new mobile phone launched or cars or even houses; everyone wants to get hold of their shares and hence the need of credit arises.
Taking credit is not bad but taking it beyond the repayment capacity, certainly is.
Here are few ways on how to manage credit effectively.
The best way to take credit is to take it keeping in mind the repayment capacity in mind.
One must ensure the EMIs or the Equated Monthly Installments can be paid even after meeting all the monthly expenses.
If an individual has got surplus funds, it's best to prepay a part of the credit taken.
It will decrease the interest burden as well the principal amount.
But some financial institutions charge a penalty for prepayment.
One must check it out.
It is not at all advisable to take credit from multiple financial institutions as it will become difficult to keep track of them and most importantly to manage them.
It is good if an individual doesn't take more than one credit card or personal loan.
As it will bind them into a net that they will find hard to get rid of.
A secured credit is always better than an insecured one as in case of the former, the security given takes a lot of burden off the borrower and reduces the risk of default.
Every financial institution keep track of every borrower through credit rating agencies.
So defaulting in payment can result in freeze of future credits or a poor credit score.
A credit score is a score given to individuals based on their payment record or credit history.
The better the payment record; the better is the credit score.
One must take credit if you are absolutely sure that you can pay off the credit taken comfortably.
If not then do make sure that the installments are paid in time.
Before taking credit, one must check the rate of interests charged by various institutions and likewise avail the most cost effective one.
Monthly savings must never be compromised as they will create a parity between assets and liabilities and can also pay off the liabilities if needed.
If in case, repayment of the credit taken becomes impossible, then approaching the bank or institute is a better idea as they may chart out a more convenient way of repayment.
One can do the same in case of a job loss or layoff.
Instead of hiding the fact it's better to come clear on that.
Financial institutions can see the case differently and with kindness.
Certain credits like education loans, housing loans do offer tax benefits.
But one must remember that personal loans,credit cards or car loans don't fall into into this category.
Irresponsible credit intake is like intake of alcohol.
Sometimes it becomes compulsion and then it's hard to get rid of it and hence it destroys everything in return.
So one shall take credit with responsibility, pay it back in time, have a good credit score and prosper towards financial security, stability and happiness.
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