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3 Money Management Tips If You Have Bad Credit

Do you ever feel like you’re being crushed by the weight of your credit score? Check out these simple money management tips to alleviate some of the pressure. 

Nobody wants a subprime score, but you might have it anyway. Once you do, it makes it challenging to handle a financial emergency. Although you may apply for a personal line of credit if you have a bad score, you won’t have as many choices as prime borrowers.

This is because some financial institutions aren’t willing to lend to subprime borrowers. And the time it takes you to find the ones that do may delay getting the help you need.

In an emergency, every second counts. If you’re tired of your score wasting time, check out these good money management tips below.

3 Money Management Tips if You Have Bad Credit

1.  Reduce Your Reliance

Tapping into a personal line of credit or credit card for everyday spending is easy. So easy that you might spend more than you mean. And if you aren’t careful, you may end up buying more than you can afford to pay back.

This much may be obvious, but there are other consequences to relying on these products, including:

  • Maxing out your limit adds bills to your plate. If you can’t pay off the balance in full, you’ll carry over money that accrues interest — which means you’ll end up owing even more than you spend.
  • If you can’t pay off the minimum payment, you may impact your history and further lower your score. It depends on how your financial institution reports your payments.
  • You’ll tie up your limit with non-essentials. Until you pay down your balance, you’ll have less of your limit available to help in an emergency

Just because you have a line of credit or credit card doesn’t mean you should use them. These products are better used a financial backup in case things go wrong — like when you can’t afford an unexpected emergency expense that threatens your budget.

2. Follow a Budget

Without a budget, it’s easy to lose track of how you spend your money. Little purchases — $10 here and $5 there — are forgettable when you compare them to the big things like rent and groceries.

What you spend on things like weekly takeout, online shopping, and subscription fees may seem small on their own, but they can add up to do significant damage to your finances.

By eliminating them from your budget, you can reroute the cash you would ordinarily spend on these items towards your bills and savings. 

3. Be Prepared to Make Big Changes

Don’t panic if you already run a tight ship. Although little, non-essential purchases are the easiest to eliminate from your budget, they aren’t the only opportunities to save.

If you don’t spend a lot of money on takeout or entertainment, look to the essentials of your budget — things like:

  • Housing
  • Groceries
  • Insurance
  • Health bills
  • Transportation

Things like moving to a cheaper neighborhood, carpooling to work, or spending more time cooking homemade meals will save you money, but they rely on radically changing your lifestyle.

You can only make them when you’re ready.

It’s not always easy to embrace change. If you’re struggling to set these new habits, remember your goals. You want to improve your finances, so your subprime score has less of an impact on your life. Reminding yourself of this can help you take on the hard task of managing your money better.

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© Everyday Gyaan 2019
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