Focus on Your Credit Health This New Year
With a new study showing most millennials face rejection when applying for financial products, a resolution for better credit health is a good idea for the new year.
Have you been rejected before? You wouldn’t be alone.
Fifty-eight percent of millennials say they have been denied a loan, according to a recent poll of nearly 2,500 U.S. adults. The poll, conducted by YouGov on behalf of Bankrate, shows this is the highest denial rate out of any other generation.
And what’s the reason? Their credit score is usually to blame. Millennials tend to have thinner credit files than those in older generations.
Is There a Silver Lining to Rejection?
Rejection may be a blessing in disguise for a generation known for overspending on splurge items. Being denied could save you from misusing financial products.
You know — that new VISA card you’ve been eyeing that promises twice the rewards you normally get, or that loan that would help you take a much-needed vacation to some sunny beach.
For this reason, financial institutions like CreditFresh never recommend using a loan or line of credit on everyday purchases or vacations. Something like a CreditFresh Line of Credit by CBW Bank is best used for unexpected emergency medical bills or auto repairs.
But what if it is an emergency?
When you’re in desperate need of help, rejection leaves you scrambling to make ends meet.
While it may feel like the whole world is hanging in the balance, things aren’t as dire as you might think. There may be another solution.
Try seeking out alternative borrowing options that fit your financial profile or sell off something valuable to drum up some cash.
Talking about your cash-flow problem may also help. Speak with the person or company you owe about a possible extension or deferment. You may be surprised to find out you can postpone a payment or make smaller installments against your balance.
Good money management tips for 2020
While completely possible, these options are harder than simply getting the line of credit you need right off the bat. So, you’ll want to do everything in your power to make sure rejection doesn’t happen.
Use a budget
A budget shows how you plan on spending your money. Because you do it in advance, you have a better chance of using your money in responsible ways, prioritizing paying bills and savings over last-minute splurges.
Make an Emergency Fund
Just make sure you set aside some money for an emergency fund each month. It’s easier to handle unexpected emergencies with or without a loan when you have these emergency savings.
Commit to Paying your Bills on Time
While several factors impact your financial health, one of the biggest ones is your payment history. Paying your bills in full and on time will keep delinquencies and other negative entries from pulling down your score.
Avoid the Minimum Payment
Never make the minimum payment when you have the money to cover the entire bill. Carrying over a balance may impact another factor that applies to your financial health.
Unexpected emergencies aren’t the only reason why people apply for financing. Are you planning on buying a new car or home? Maybe you’re thinking about going back to school or taking on a renovation.
If you plan on getting some help from a financial institution, turning these tips into habits may help you achieve your goals.