Credit scores are more than just numbers - it is an important measurement of your financial health. It is viewed by lenders, bank officers, investors, employers and even property managers or landlords. The purpose of your credit score is to provide insight as to how responsible you are when it comes to financial matters - especially debt. It shows if you are honest, disciplined, organized and have a sense of personal responsibility.

Your credit score is based on your credit report. It gets the following details with the respective rank of importance: payment history (35%), debt amount (30%), credit history (15%), new accounts (10%) and types of credit accounts (10%). If you are always late on your payments, you can expect that your credit score will suffer greatly.

What you need to know is that your credit history can improve and you can do it in a matter of months to a year. It will not be an immediate jump to a high score but more of a gradual one. So to make sure that your credit score is in good shape, here are some suggestions that you can implement in your financial life.

If you have a lot of debts, you need to pay them off. Know that the key here is your performance more than the amount. Make sure you send payments on time and you will not default on any of your dues. Remember that payment history and debt amount constitutes to around 65% of the credit score. If you pay your debts diligently, you will increase these two and it will help you with your score immensely.

As you pay off what you currently owe, keep your debt balance low. It will not help your case if you continue to take in more debt. If possible, keep your debt level to zero. If you really have to apply for a loan because you want to buy a house or start a business, make sure that your current debt is low or better yet, non existent.

When you apply and get approval for financial assistance, you need to make sure that you will keep up with your payments. Also, if you don’t have to, try not to close any of your old accounts. The older an account is, the better it will be for your score. However, if you know that having more than one credit card may endanger you to spend them and thus put yourself under a lot of debts, then cut them off and retain only one card. If you are diligent in paying off that card, you can expect that your score will eventually rise.

Taking care of your credit score is a tricky task to accomplish but with practice, you should do just fine. Make sure you check on your credit report regularly so that you can report any discrepancy or unauthorized use of your account - which actually implies that you had been a victim of identity theft.

Credit cards can be difficult to control. In most cases, people who are in debt usually have these plastic cards as one of the culprits. These cards were created to entice us to buy things and avail of professional services that are beyond our current financial capabilities. Even when you cannot afford it at the moment, you can always swipe your card to get what you want. While the whole concept obviously does not promote the best financial habit, there are ways for card holders to stay away from credit card debt.

First and foremost, if you have existing credit card debt, you need to pay them off. There are debt relief options that you can use like debt consolidation and debt settlement. Choose your option based on how much you can afford to pay towards your credit card debt. Ignoring your debt is a very bad idea because it is notorious for accumulating very easily because of the high interest rate and the finance charges. Work on your debts and pay off what you owe.

When your current credit card debt is paid off, you don’t really have to cut them all of. If you wish to get rid of the high interest rate cards, you can do so but if you know how to use your cards properly, the interest rate will not matter at all.

After using a credit card to pay for something, you usually have a grace period between the date of purchase and the due date of the billing statement right after. If you pay for the purchase in full within this time frame, you don’t have to worry about the interest rate. That means, you really just pay for what you got - no additional fees. This habit will not only help you keep payments to a minimum, it will also show that you are a responsible credit holder.

Another way to use your credit card wisely is to limit its use. Ideally, you should only use your card for emergencies. If that is the case, make sure you define just exactly what an emergency is. Will it be strictly for health reasons only? Try not to use it for basic expenses because that will be very hard to control.

When you use your cards double check the print out before signing. Encircle the amount to check if it is the right amount. Keep your copy so you can double check the billing statement once it comes in. If there are any discrepancies from what you remember, investigate and report it to the credit card company.

If you have to use it for expensive purchases, set up a payment plan to make sure that your balance will not grow further. Keep that plan as short as possible. Also, keep the price from going more than 30% of your card’s limit.

Hopefully, these rules will help you get the best rewards for your credit cards. It is very important to practice smart spending habits and try not to be deluded into thinking that you can pay for things that are actually more than what you can actually afford.

Taking care of one’s finances is all about making the right choices. And to make the right decisions, you need to know what is good for your finances and what is destructive.

Unfortunately, looking at how society have evolved, the norm may not necessarily be supportive of proper financial management. There are a couple of lies that you may be telling yourself that could lead to your financial ruin. Even if everyone you know is practicing it, that does not mean it is correct. So here is a list of wrong assumptions that you may be telling yourself. See if these apply so that you can correct them and save yourself from making bad financial decisions.

First of all, some people think that saving for retirement can be put off for later. There is no such thing as saving too early. In fact, the earlier you start, the more secure future you will have. You don’t even have to think of it as your retirement money. Think of it as your emergency or reserve fund. This will literally save you from a lot of future disasters. When an emergency expense is needed, you don’t have to borrow money or rely on your credit card to help get you out of a tight spot. You can dip into your savings and save yourself from all the interest rate and overall stress associated with debt.

Another lie that is quite common for people is basing their purchases on what they can afford. For instance, just because you can afford to buy a luxury car, it doesn’t mean you have to. Even if you qualify for a million dollar home, it does not mean you should buy one. If you really want to make wiser spending choices, make sure you only buy based on what you need - not how much you can afford. If you only need something that costs less, then put the extra money on your savings. That is the wisest move that you can make.

Society has put so much importance on material things. Although it can really help make your life convenient, all of that will be overpowered by the debt payments that you have to keep up with. If you want to buy something expensive and is clearly just to appease your ego, then make sure you pay for it in cash. Be more confident about yourself and remove the notion that your money will define your success. You may be surprised that some of the self made millionaires in the country have simple needs.

You don’t really have to live a frugal lifestyle in order to say that you are making the right financial decisions. You just have to make sure that your spending is not ruled by expensive price tags. Keep in mind what you just need and stick to that. You do not have to possess the priciest items to prove your self worth. Live within your means and grow your savings - that is how you can be deemed as a financial success.

When your credit report reflects that you are undergoing debt collection, that is usually a bad sign. It is one of entries that will lower your credit score. This means you have been late on your payments and a collector had been called in to make more aggressive efforts to get you to pay what you owe. If this is your current situation, then you need to take action immediately.

Your concern will now be more than just paying your dues. You have to try and fix the blemish on your credit report. To do that, you need to have this entry deleted from your report. But how do you do that? Your goal should be to get the status of that account back to “Current” or if possible, “Paid.”

To do that, you obviously need to pay back your debt. The ideal scenario is to come up with the full amount that will allow you to pay your credit completely. If you have that, you can negotiate with the collector to remove the debt collection entry on your report. That is possible but only if you can wipe off your debts completely. If not, the most that you can expect is to have it reflect as current. That means you are meeting your payments without a problem.

In case the collector insists that you pay off the debt completely, ask them to remove the account altogether. But only offer this if you are sure that you can get an amount that will allow you to meet the collector’s requirement. If they will not agree to this, have them change it to “Paid in Full.” Again, this should all be in writing before you send any payments.

Try to convince your collector to change the status on your report. You can send a letter to your collector to delete the entry on your credit report in exchange for payments. Specify if you will pay all of the debt or get it current. A written response from the collector stating that they agree to remove it if the X amount is paid off should be received first before you pay off anything. Do not agree to pay unless they also agree to change it - that is unacceptable and you should get a copy of your credit report to make sure the changes had been made. Do not be afraid to negotiate with them if you cannot afford the required payment.

In the event that you really cannot meet even the required amount, then you may have to opt for debt settlement. You can choose to hire a professional to help out in the negotiation process or you can do it on your own. If all goes well, you can expect that your report will reflect “Paid. Settled.” This is not as ideal as the other scenarios but it is definitely an improvement. It simply means you have paid only a portion of your debt and had the rest forgiven.

Ultimately, the best way to get out of debt with a debt collector is to really pay it off in full. And if you really do not want to get your credit report blemished by your debt, keep up with your payments so collectors do not have to get involved.

When you realize that your credit card debt has grown into a huge amount, your initial reaction will be shock, disbelief and then denial. Most people get over these three reactions immediately and start to take action for their credit responsibility. However, there is also the percentage of debtors who refuse to accept their debt and choose to ignore the debt that they currently owe.

While not thinking about your debt will keep the stress away, you will never be at peace. It may allow you to continue living the life that you got used to but that will only be temporary. Your credit card debt is the type that can quickly spiral out of control. To convince you that ignoring your card debt is a bad idea, here is a rundown of what will happen the longer you run away from this credit obligation.

Whenever you miss one payment, your creditor will immediately take notice of this. It will be considered a missed payment if you send less than the minimum payment requirement or send nothing at all. Even if you are late for only a day, you will immediately be given a $25-$35 worth of late fees. The exact amount will depend on your credit card company. This fee will be added on top of your balance. On top of that, your current balance will be used to calculate for the interest amount that will be added to your minimum monthly payment. This is done by getting your balance and multiplying it based on the current APR (Annual Percentage Rate). The product will be the interest rate that will be placed on your monthly minimum payment. As you ignore your balance, it will grow and thus making the interest amount grow as well.

Usually, it takes the creditor 30 days before they report that you have not been making your payments. If two billing statements passed without any payments from you, then you can expect that your credit report already reflects this behavior and your score will decrease because of that. This decrease can be more than 100 points - depending on your current score and the time that lapsed since your last payment. Some creditors wait until after 90 days before reporting that you have been defaulting on your payments.

When you have been late for 30-60 days, you can also expect that the people who will call you will be coming from the collections department already. The good news is, this is still within the company so the callers will still treat you as a client and will not be disrespectful. They will still try to salvage their relationship with you in hopes that you will still do business with them in the future. However, this also means that the creditor already marked you as a bad account. At this point, ignoring the debt will be very hard to do.

After 180 days of not paying your credit card debt, you can expect that your account is already charged off. This means the creditor gave up on getting any profit from you and will apply for a tax exemption to cover their loss. But this does not mean your debt is forgiven. In fact, it signals that the calls will get uglier because collection will be turned over to a third party company who wouldn’t care for you as a client.

A charged off debt also brings a negative mark on your credit score so you can expect that it will go even lower.

Bottom line is, ignoring your debt will not make it go away. The sooner you act on your debt problem, the easier it will be. There are many debt relief options that you can choose from. In fact, if your concern is your credit score, debt consolidation is the option that has the least effect on your report. Know your options and start getting yourself out of debt now.

If you are in debt, your credit score has surely been damaged at a certain extent. Even as you pay off your credit obligations, you will find that your score will continue to suffer - at least if you chose either bankruptcy or debt settlement as your debt relief options. When you have finished paying off your debts, one of the first things that you will be advised to take care of is your credit report. You need to repair what was damaged so your finances can regain its full potential.

Your credit score is very important because it will allow you to get financial aid should you need it. That can be in the form of a new home or a business that you want to finance.

Depending on your choice of debt relief program, you can actually start rebuilding your credit score even as you are paying off your dues. For instance, if you chose debt consolidation, you can actually improve your score by just keeping your payments up to date. But if debt settlement is your choice of program, then you may have to postpone rebuilding your credit score until after the creditor or collector agreed to settle with you.

By regardless if your debt relief program can or cannot allow you to rebuild your credit, here are the things that you can do to improve your score.

Start your efforts by applying for a new credit. In debt consolidation loans, this is a no brainer because that is exactly what you will do. You will apply for a loan and this time, you will do things right. This is your chance to begin a new slate and as you make one payment after the other, your credit score will pick up that good behavior and it will be shown in your report. There is nothing you can do with your past bad credit but for new ones, it is your chance to display good paying habits. Of course, we are referring to paying your dues on time.

Another thing that you can do is to stop acquiring debts. If you continue to add to your credits, that will lower your score further. You need to stop using your credit cards and start spending only what you can afford to pay in cash. If you enrolled in a debt management program, you will actually be asked to stop using your credit account. But for the other programs, like in debt consolidation loans, your cards will not be put under restriction. You just need to make the conscious effort to stop using them.

Ultimately, developing proper financial management skills and practicing new habits will be the keys to increase your score. Apparently, something has to change. If what you did before was right, then you wouldn’t be in the debt situation you are currently in and your score would not be so low. That means you need to change something about your spending and how your manage your personal finances.