How to Steer Clear of Bad Credit


The ability to manage your payments and repay borrowed amount on time reflects on your credit history. When you fail to do this systematically it leads to bad credit score. This can be a major problem in the future when you seek any kind of loan as either it won’t be granted or you will not get it at an affordable interest rate.

For entrepreneurs, it might be overwhelming to handle their business and personal finance while maintaining a steady good credit score. However, with certain habits and precautions, you can easily steer clear of the bad credit. Read this blog post to learn about some smart financial habits that can help you improve your credit score.

Basic Financial Habits You Should Practice:

Avoiding bad credit becomes easy when you maintain certain financial practices. They are:

  • Timely paying off your bills

Many of us use multiple credit cards and remembering the due dates for each is often difficult which leads to late or missed payments. Most credit card companies will charge a hefty amount of interest on late payment which adds to the monthly expenses and reflect badly on your credit score. If needed, set reminders of payments you have every month and make sure you have enough cash flow to pay the bills without fail.

  • Keeping track of your personal credit

If you have a start-up, your company will not have a credit history yet. In such a situation, lenders will investigate your personal credit history to decide whether they can lend you the amount or not.  Therefore, it's important to keep a track on your personal credit score and ensure it's in good state.

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  • Making the full payments every time

Paying only the minimum monthly payments can trap you in to credit cards debts in the future. Even if your credit company suggests minimum monthly payments, it is wiser to make the payments for the full amount in the long run. The interest rate will keep increasing if the debt is not paid off in full within the due time and that in turn will lower your credit score.

  • Avoiding too many loans in a short span

Taking different types of loans back to back in a very short span of time gives the impression that you may be neck-deep in debt. By spacing the loans over a span of six months to a year you can avoid creating such an unfavourable impression. Also, it will help boost your credit score at the same time as you will get more time to plan and pay them off.

  • Sticking to a budget plan

Having a budget plan for your personal and business expenses will make it easier to save enough money, pay all dues in time and maintain a good credit score. Bookkeepers can assist you by maintaining an accurate record of your expenses and you can easily make a budget plan by taking their journal entries into account.

  • Consolidating your debts

Consolidating means if you have several loans from different companies, you can consolidate them into a single monthly payment, often at a lower interest rate. As a result, you will have a significant amount of savings that will help you pay your debts on time and maintain a good credit score.

Whether you are a business owner or a professional, a bad credit history and score can negatively impact you in the future. Keeping the above-mentioned suggestions in mind and following them diligently will can boost your credit score so that you are able to get a loan easily when you need it. However, if you need a helping hand, a bookkeeping firm like Virtual bookkeeping services can assist you. They will simplify these tasks as all your financial transactions including debts, loans and pending payment will be accurately maintained and accessible to you whenever needed.