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Build Credit, Not Debt

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HABIT 004: BUILD CREDIT, NOT DEBT.💳

“Beware of little expenses; a small leak will sink a great ship.”
~Benjamin Franklin🤯
Having a High Credit Score opens up huge doorways of opportunity for the future. Business ideas, free travel, major purchases… but first and foremost, it’s important to build or rebuild credit.
💳CREDIT SCORE BREAKDOWN
(from most to least important)
✅Payment History – 35%
✅Credit Utilization – 30%
✅Credit History – 15%
✅Public Records – 10%
✅Inquiries – 10%
SIMPLE WAYS TO CORRECT CREDIT USE FOR CREDIT SCORE IMPROVEMENT
🔑 Payment History is an obvious one and makes up 35% of the score. Do not miss a payment! Use an app. Find a way to automate the process or at very least set an early reminder.
🔑 Credit Utilization is important to keep it low but not 0. The purpose of a credit score is to gauge the likelihood that someone will repay the money they borrow. Higher balances are more difficult to afford and could indicate over extension. Use under 20% of the credit limit before paying it off. Do not wait until the monthly statement comes in. In a perfect situation use under 10%.
🔑 If the payment frequency becomes a headache due to a low card limit, ask the creditor for an increase. This will also drop the utilization ratio to a more manageable amount. An alternative to this would be to spread out charges over multiple cards instead of one card, especially if there is a large payment.
🔑 A low maintenance method for those not wanting to aggressively grow credit is to simply pay cards weekly or bi-weekly.
🔑 Credit History. Do not cancel cards or bank accounts. Swap them out for low-fee or no-fee alternatives and stow them away instead. The longer the credit is held, the more trusted it is.
🔑 Inquiries. Limit credit inquiries to absolutely no more than 6 hard inquiry periods per year. The likelihood of credit approval drops by doing too many.

🔑 Credit Diversity. Car-Loans, Mortgage, Line of Credit, Credit Cards…the more responsible someone is with more different types of credit the more appealing that person is to lenders.

👍LASTLY 2 FREE WAYS TO MONITOR YOUR CREDIT SCORE ACROSS BOTH CANADIAN PLATFORMS:
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Written By

Rafael

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