Restoring Your Credit

credit card

Unfortunately, life doesn’t always go as you plan and, sometimes, you will encounter periods of financial difficulty. If you have a savings set aside, it’s no issue, and you just take out the money to cover your expenses. However, without a safety net in place, you will end up borrowing money from your bills and end up with late payments, additional fees and a reduced credit score. The good news is that if your credit score is low, there are ways to improve it. 

Pay On Time 

One of the best ways to start to raise your credit score is to pay your debt on time. Thankfully, there are several ways to achieve this. If you have equity in your home, consider doing a refinance and use the money to pay down your outstanding debt and bring your bills to a current status. If you don’t have a mortgage or no equity in your home, you can borrow a small amount through an installment loan. For instance, if you live in South Carolina, you can look online for lenders who offer South Carolina installment loans

Re-evaluate Your Spending Habits 

Many people bring in enough money to cover their bills, but they simply have poor spending habits. If you see something you want, and it costs over $500.00, instead of putting it on a credit card, save up for it. Adding it to your debt is only going to increase your monthly payments and your debt-to-income ratio. Learning to pay with cash is a great way to start reducing your debt. 

Paying Down Debt 

Debt management is a very important component in a healthy credit score. Your debt-to-income ratio can also lower your overall credit score. It only makes sense that if you have a mortgage, two car payments, a personal loan and multiple credit cards with high balances that you will give the perception of a higher risk to lenders. By reducing the balances on your credit cards to within a third of the credit limit, you’ll start to increase your credit score. 

Importance of Established Credit 

Your established credit shows any lender that you are trustworthy and responsible. So if, while you are in the process of reducing your debt,  you may opt to close cards out, be wary. If you have relatively new cards, such as store cards, with higher interest rates, you can cancel them. However, if you have a few cards that you have for more than a few years, those you should keep active, as they will work in your favor. 

Borrow Only What You Need 

Even if you are able to borrow more, you should always only borrow the amount of money that you need. This will help you to repay the loan in a shorter amount of time and pay less in interest, and it will also help to keep your debt-to-income ratio within the acceptable range.   

Establishing a Budget 

Without having a budget to reference, it’s easy to miss a bill that only comes due a few times a year, such as school tuition or your property taxes. A budget is a simple piece of paper that you use to keep track of your income against your expenses. It also lets you plan for your future, with the purchase of a home, a car, or for your retirement. Additionally, a budget prevents you from spending all of your money, making it clear when payments are due and the money you need to cover them so that you keep your credit in good standing. 

It takes years to create a good credit score and, unfortunately, only a few late or missed payments to undo your efforts. The good news is that if you start to pay your bills on time and work towards reducing your debt, your credit score will begin to move in a positive direction.

The Pros & Cons of Renting Alone vs. Renting with Roommates

renting

The great thing about being a renter is the flexibility of your living arrangements. From space to budget and amenities, renting an apartment is a good fit for different people at different times. Depending on your situation—as well as your personality—another very important question to ask yourself is “Should I rent alone or find a roommate?” 

As with most things, there are pros and cons to either option, so there is not one correct answer. Evaluate your situation, think about what type of person you are, and then decide if roommates or solitude are your best fit. 

Renting Alone

If you decide to rent your own place, you’ll have a lot of freedom. You can personalize every room the way you want to, without having to worry about the preferences of anyone else, other than the landlord. You also don’t have to think about abiding to someone else’s schedule; so, any time you feel like singing or watching TV or blending some fruits, you can make all the noise you want.

Privacy is guaranteed, and it weighs a great deal if you’re someone who needs their space. However, if you like having people around and you’re not used to being on your own, it might be difficult to deal with all the alone time.

Renting alone also comes with a lot of responsibility, meaning you’ll have to clean and maintain the apartment yourself, pay the bills on time, and manage the costs of groceries and other expenses on your own. It also might be more expensive to rent alone, even if you’re renting a smaller apartment. But, if you take control of your finances, you can end up saving money. 

Renting with Roommates 

Co-living is trending right now, and for a good reason. More people means more money to spend, which automatically means more space, even if it is shared. Privacy will be sparse, so if you value your alone time, think about the implications of almost always having people in your home. Depending on how much you’re all willing to compromise, you can get an apartment that is much larger than the one you could get on your own. 

Sharing a place means you will also share the cost of utilities—and maybe even groceries—with your roommates, cutting down on expenses. This is especially helpful with subscription-based services such as internet, cable, or Netflix, where you’d have to pay the same amount even when living alone. Cooking together and splitting the cost of food will also lead to some serious savings if you manage your finances properly

Besides splitting bills, you’ll also be splitting chores. This can be a friction point, so it’s best to set some ground rules and create a schedule to which you all agree. If you do so, some of the painful cleaning and decluttering can actually become fun. 

But remember that roommates can be wildcards – you never know what you’re going to get. If you don’t have any friends or acquaintances who want to join you in sharing a rental, be sure to turn to a trustworthy source to avoid scams. Do your research, ask a lot of questions, and make sure you find a roommate you’re compatible with

Whether you choose to rent alone or with someone else, there are many ways you can save money as a renter. Adopt a frugal lifestyle focused on minimal expenses and follow the golden rule of 50-30-20: 50% of income goes to needs, 30% to wants, and 20% to savings. It may seem complicated at first, but with dedication and experience, you’ll be saving money in no time. 
About the author: Mihaela is a passionate reader and writer, with an affinity for language and linguistics, as well as the latest technological developments. She discovered her passion for real estate at RENTCafé, and you can read more of her articles on their blog.