December 24, 2009
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Surviving the 2010 CC Crunch, Pt.1
Never pay late!Just like in a gas crunch, we are faced now with a credit card crunch and, while credit will always be available at a very high price, most of us will be strapped financially from the high cost and will be financially rationed-out of the credit card game just like healthcare.
In many ways, it's mostly going to come down to achieving an excellent credit card score. Gone are the days when a medium score was good enough (at least for the near future and probably beyond). With typical credit card APRs now approaching 24%, finance charges will quickly get out of hand. Most prudent borrowers will have to succumb to a lifestyle of not borrowing beyond the current billing statement.
Tip# 1 -- Always pay on time (or early): With eyes toward the future, we must strive to attain that excellent credit rating that allows us to borrow over time and not quickly extend beyond our means. While there is no quick way to get that good credit rating, there is a very quick way to lose what we already have...by paying late. We must never do that. Always paying credit cards on time (or early) must be a foremost concern.
Of the five FICO weighting criteria, Payment History carries the most weight (35%). So, paying late can turn out to be one of the worst ways to hurt ourselves. Come February, it will be difficult for credit card lenders to jack up your finance charges for questionable reasons. But late payments will be one of the few easy justifications. Make a habit of paying early and don't risk irreversible trouble. Since it takes so long to build an excellent credit score, many of us will have to deal with less than the stellar. For these conditions, we need do develop some survival techniques. The following tips offered here will be intended for that purpose.