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Recession Proof Your Credit Rating

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Authored by Lori Godin in Credit Card
Published on 01-14-2009

With the unstable state of the economy, many customers are concerned about the rising interest rates and the roll-backs that are taking place on credit limits for credit cards and personal revolving lines of credit. How can you ensure that your credit rating remains high to avoid these implications of the unstable economy? Using these tips, you should easily be able to recession proof your credit rating.

Create an aggressive repayment plan to cut down on debt as quick as possible. If you are one of the customers at the hands of the rollbacks, your high balance could be detrimental to the state of your personal finances Ensuring that you rid yourself of these high balances could mean the avoidance of severer overlimit fees associated with these accounts.

Keep your credit rating up by making regular, on-time payments to creditors. This is the most important way to maintain the credit rating. Thirty five percent of your credit score is calculated using payment history and methods. Missing one to two late payments could cost you a higher interest rate with the credit company while shaving valuable points from your credit score.

Start a savings account. A savings account will protect your assets, allowing you to turn away from credit card use and repay secured debt. For many customers, a savings account provides a viable alternative to turning to credit in times of need. Throughout this state of economic turmoil, consumers are experiencing a decrease in income and an increase in expenses.

If you are going to keep using credit, maintain less than thirty percent of the limit on the card as a balance. These customers are more likely to repay the debt, rather than default and are seen as a lesser risk by credit card companies. This also helps to maintain the credit score.

One of the most important aspects of preparing for a recession is to maintain the credit score and cut expenses as much as possible. Repaying balances will save money on interest rates, as the less the balance, the fewer amount of interest which is going to be paid to that account.

Ensuring that your income is secured throughout this time of crisis can mean the difference in being able to afford your monthly expenses combined with debt repayment. Finding creative ways to earn extra income could mean the difference in becoming financially strong, while injecting extra income into the household to strengthen personal finances.

Taking these measures to protect your personal finances ensures that consumers are able to maintain their assets, decrease their liabilities and take control of their personal financial situations throughout this economic downturn.

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