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8 Common Ways That People Ruin Their Credit

There are plenty of effective ways to ruin your credit if you aren’t careful. A lot of people don’t realize that what they are doing is taking a very real and negative toll on their overall credit rating. If you want to maintain good credit for the long term, it is important that you learn about some of the worst mistakes to avoid. The worse your credit gets, the more difficult it will be to get a loan for a car, house or anything else you might need in the future.

1. Getting a Credit Card Too Young

If you get a credit card when you are too young or not ready, you can do quite a bit of damage to your credit. While it is true that you can’t get a credit card if you are 18 years old, it is possible to get one if someone co-signs on your behalf. Opening up a credit card when you are too young and immature can lead to serious financial problems. You should feel completely confident in your ability to handle such a big responsibility before making this decision.

2. Acquiring Multiple Credit Credits at One Time

Getting numerous credit cards within a very short period of time can also be bad for your credit. This is also an indication that a person isn’t responsible enough to handle a credit card properly. If you are still young, there is probably not a good reason to have more than one card. In fact, most people with multiple credit cards don’t really need all of them. Think twice before you keep applying, because you could end up damaging your credit in a big way.

3. Not Paying Your Bills on Time

Neglecting your credit card payments and other bills can quickly lead to a declining credit score. It is crucial that you make a point of making these payments on time so that you can avoid suffering serious consequences later on. Ignoring your credit card bills will only compound the interest, putting you into a spiralling pit of debt. Once you are in debt, it can be very difficult to get yourself out. One of the best ways to avoid this is to set up automatic payments so that you don’t forget or put off paying your bills when they are due.

4. Letting Other People Use Your Cards

You should never let anyone you don’t completely trust use your credit cards. While you might be tempted to help out a friend in need, you shouldn’t count on them paying you back. This is one of the biggest mistakes that people make with their credit cards.

5. Co-Signing for the Wrong Person

You probably wouldn’t lend money to someone who is responsible, so it therefore doesn’t make any sense to co-sign a loan or credit card for them either. If someone asks you to be a co-signer, you should definitely think twice before agreeing. If the person fails to pay the money back on time, you will be on the hook for their debt. This can quickly put you in a very bad place financially, and it can trash your credit for a long time.

6. Being Careless with Personal Information

If you aren’t careful about protecting your personal and financial details, you could become the victim of identity theft. Thousands of people throughout the UK have their credit negatively affected because of this mistake each year. There are lots of ways to ensure that your information stays safe, such as never shopping on websites that aren’t completely secure. You should also never give your credit card number or any other sensitive details to people you don’t trust.

7. Failing to Pay Back a Loan

Those who take out a loan and do not pay it back are just asking for their credit rating to plummet quickly. Getting your car repossessed or home foreclosed on due to non-payment can be devastating to your finances as a whole. Before you decide to take out a loan, make sure you can pay it back.

8. Not Checking Your Credit Report

Everyone should make a point of checking their credit report at least once each year. Take a close look at your report to make sure there aren’t any mistakes that need to be corrected. You might have to pay to get a copy of your report, but it is well worth it.

Final Thoughts

If you want to keep your credit score as high as possible, you need to make an effort to avoid all of the mistakes listed above. Some of these mistakes are very easy to make, but they can have hugely negative effects on your credit and finances. The more conscientious you are about these things, the more likely you will be to maintain a healthy credit rating.

6 Financial Tips to Follow Before the end of the Tax Year

There are certain tips that you can follow to help with managing your personal finances before the end of the tax year. Most people don’t even consider half of these things, and they are missing out. With all of the different ways to boost your finances, it is crucial that you spend some time getting this information before doing anything.

1. Take Advantage of your ISA Allowance

It is always a good idea to use the money in your ISA so that you don’t end up losing it. While you may think that you don’t have any real reason to use your allowance right now, it’s still a good idea to put it in the bank or invest it. Once you do one of these two things with your allowance, it cannot be taxed. You should never ignore the end-of-the-tax-year deadline, because you’ll just be losing money that you could otherwise benefit from.

2. Come up with a Plan for Investing

If you are interested in investing your money, you first need to come up with a solid plan for doing so. Before you take advantage of a stocks and shared ISA, you need to take a look at some of the investment opportunities that exist. It’s never a good idea to rush into this kind of decision, because you will almost certainly regret it. Investing is rarely a sure thing, so you need to do everything you can to minimize your risk.

3. Give it Away

You may also want to consider giving away some of your money to someone you know as a gift. You will be able to give away £3,000 in gifts each tax year without having it be counted as part of your estate. This is important to do if you want to give someone money or a gift without paying taxes on it later on. It is particularly crucial for those with larger estates to consider this. In case you didn’t know, you can give money to your spouse or civil partner tax-free, assuming they live somewhere in the UK. It is a good idea for everyone to know these things.

4. Decide on the right ISA

It’s never too early to start thinking about what sort of ISA you are going to take advantage of next year. There are cash ISAs, stocks and shares, and lifetime ISAs. It is important that you review your options until you find one that can benefit you the most. The more you plan ahead, the better your chances will be of benefiting financially. If you want to buy your first house, you should really look into getting a Help to Buy ISA.

5. Have a Will Made up

It is important for almost everyone to have a will, especially those who have a family of their own. You shouldn’t have to spend very much to get this document written up, and it will give you peace of mind. You can trust that your partner and children will get everything that is coming to them in the event of your death. Those who do not have a will can plunge their family into a very unpleasant situation. In fact, your loved ones might not get everything you want them to if you don’t have a will made before you pass on. You can have this done fairly quickly, and it is well worth the expense. The larger your estate, the more sense it makes to have a will. Even many younger people should have a will in place.

6. Keep up with Relevant Changes

The government always seems to be changing the laws when it comes to matters of personal finance, so you need to keep on top of them as best you can. Some of these changes could affect you in a big way, which is all the more reason to stay in the know. The personal allowance for income tax changes from time to time, and it affects millions of people across the UK. When you make an effort to stay up to date in these matters, you can protect yourself and your finances.

It is also to put as much into your pension as possible before the end of the tax year. There is no question that pension contributions are the most practical and efficient way to invest your money. Start taking the necessary steps to make your pension pot as large as possible so you can get to where you want to be on time. You can pay into your pension by as much as £40,000 per year, which includes contributions made by your employer. The sooner you start taking these important steps, the better off you will be in the future.