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Many Americans have struggled with a financial hardship throughout their life, and in the process, have destroyed their credit. Most people know that in order to make big financial decisions, you need to be able to show that you have financial independence, which is seen through your credit score. So what kind of solutions are out there for individuals who have less than perfect credit, and want nothing more than to improve it? N.A.D.E.A.’s free credit tips serve as a valuable resource that can help provide you with easy credit rebuilding. In utilizing these tips, consumers have been able to see a huge improvement in the way they think about their finances. N.A.D.E.A.’s credit tips are helpful for everyone and provide the most up to date information on topics in financial literacy. Our website provides a one stop shop for financial information, which makes the ease of finding what you need simple. We understand that with so much information out there about building your credit, it can become quite confusing. Below you will find some of our most discussed topics on credit.

Utilizing credit cards

When used correctly, credit cards can be a great financial tool and a benefit when it comes to building your credit. Credit cards give the borrower a determined line of credit that can be used for whatever goods or services that they need. There are many benefits to having a credit card such as cash back rewards for certain purchases. Many find a credit card to be a blessing when it comes to financial emergencies, as they can provide the consumer with the credit they need right away to pay for the emergency, which they can payback later.

Even though credit cards offer great benefits, there are several consumers who do not know how to use their credit card wisely. Having this type of information is crucial because you can avoid racking up mounds of credit card debt. Misusing credit cards to splurge on wants rather than needs is a good way to put you in debt. This debt will only cause more stress due to more money owed for interest and harassing phone calls received from collectors. In using a credit card to purchase an item or service that you do not have the money for to begin with will also cause a fast drop of your credit score. Cash advances are available through some credit cards, but will usually cost a fee. Add this onto your monthly payment and interest, and you are looking at a lot of debt to pay back.

The bottom line is to not take out money or spend money on your credit card unless it is absolutely necessary. Remember that having a credit card does not mean you have free money to spend as you please. Hold off on purchases you do not need and you will avoid maxing out your credit card, which will provide financial success in utilizing your credit card the right way.

Affordable debt

It is important to maintain your debt and keep it affordable. Mountains of debt will not go away easily and can take a lifetime to pay off if you are not careful. Understanding your personal debt-to-income ratio can determine if you are safe to take on more debt or if you should avoid it. Debt-to-income ratio can be calculated by dividing the amount you pay in debt per month by your take home, monthly income. Creditors will look at this ratio when deciding if you would be a financial burden, and thus not borrowing you the credit you need. Your debt-to-income ratio should ideally be less than 36 percent, but the lower the better. With debt comes interest and possible late fees, so having a lower debt-to-income ratio will allow you the opportunity to invest or save any extra funds.

Making minimum payments

Consumers who use their credit card foolishly are also likely to only be making the minimum monthly payments on that card. The minimum payment is usually a small amount so that you end up paying back more money in interest, thus creating revenue for the credit card companies. Avoid the minimum payment and try to payback even a little bit more, if not the full balance (which is recommended). An easy way to make sure you keep the balance on your card down is to not spend hundreds of dollars monthly with your credit card. This will ensure that you can pay back more than the minimum monthly payment, and keep your interest payments from adding up.

Debt relief options

N.A.D.E.A. is a Consumer Credit Counseling Agency, which can help you find the relief you need from overwhelming debt. An option is to borrow more money to pay off old debt, but then you simply end up swapping one debt for a new debt. This might be beneficial if the interest rate is lower for the newer debt, but is still a recommended way of tackling your finanical debt. Obtaining a home equity line of credit can be dangerous because you are setting yourself up to have your home taken away from you, if for some reason you default on payments.

You may also find these credit topics from our financial education section useful: