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How to avoid harming your credit score

Credit score and rating
One of the most important factors of your financial life is your credit score. Your credit score is the most important factor in determining your interest rates and creditworthiness.

Credit scores are used by banks to determine credit limits, loan rates, and mortgage rates. Certain service providers use your credit score to determine the risk type of customer you are whether or not you should pay security deposits. Insurance companies use credit score to determine your monthly premiums.

It is important to know what you can do to improve your credit score, but you also need to be aware of what actions will harm your credit score. Listed below are few things you can do to protect your credit rating.

  • Paying credit cards late
  • Not paying your credit card bill at all. While this mistake is obvious, almost everyone makes it once.
  • Running up large balances on your credit cards, even if you pay it off every month.
  • Having creditors charge off your account when they think you won’t pay.
  • Having creditors pass on your debt to third party debt collectors.
  • Defaulting on loan you have taken out.
  • Ignoring or missing errors on your credit report. Check your credit report periodically to see if there are any inaccuracies.
  • Paying your rent late. Landlords have the right to report you late payments even if it is few days late.
  • Filing for bankruptcy can devastate your credit score.
  • Assuming your spouse’s credit rating ad actions have nothing to do with your.
  • Thinking you don’t have to pay your credit card balance when there items in dispute.
  • An increased debt/credit ratio is when your balances suddenly spike, but you have not been extended a new credit line
  • Having private or government liens against any property you own.
  • While it may seem counter intuitive, steering clear of credit and debt isn’t the responsible thing to do either.
  • When you co-sign a loan for a relative or friend, you open yourself up to blow-back from any bad activity that happens down the road.
  • Bouncing checks is similar to missing credit payments, a consistent inability to make payments through a checking or debit account.
  • Not paying your mortgage payments and having your lender foreclose on your home.
  • Borrowing money just to boost your credit score.
  • Racking up credit card debt early in life.
  • Having a court pass a judgement against you to force you pay a debt.
  • Maxing out your credit cards or going over your credit limit.
  • Closing credit cards that still have a balance on the account.
  • Closing old credit cards. It is better to have a long history of credit.
  • Applying for multiple credit cards or loans.

SA prepared to protect its economy

The South African government is prepared to act in order to cushion the overall economy from the current global economic scenario, which unfortunately presents significantly greater uncertainty for developing nations.

“Precisely what we suggest is that we are going to assess and manage debt; we intend to make certain we do more than enough for infrastructure. We are going to do things we have to do to refloat the economy,” Finance Minister Pravin Gordhan stated.

 

Finance Minister Pravin Gordhan

 

“Our own view is that it’s 60/40 against a double dip recession while other people are predicting a 50/5 chance, dependant upon the decisiveness with which other countries in the world actually starts to deal with its problems. We will have to wait and see,” said Gordhan. The National Treasury and the Reserve Bank have already released a press release that the country would keep an eye on the impact of the downgrading of the US and sovereign debt crisis in Europe in relation to the South Africa’s economy.

Last week, rating agency Standard & Poor downgraded the US credit rating, reduced from AAA to AA+. The Treasury has briefed Cabinet on the effect of global developments and additionally precisely what it meant for the economy. What was currently happening in the recovery stages (which usually take 5 years at the very least) following the 2008 global financial crisis was that political constraints, as with the US, are now being experienced.

“… At which brinkmanship was exercised by key political players [and] the problem of sovereign risk, countries were required to bail out their banks. That took on a lot of debt and in addition to the debt, historically developed countries have taken on too much debt,” said the minister, adding that South Africa’s debt to GDP ratio was between 34 and 35 percent this year, when compared to the 80 to 200 percent of Japan.

The uppermost level of debt to GDP that South Africa is predicted to reach is 40 percent. “Political brinkmanship and political dithering along with a absence of decisiveness in certain regions of the world has created uncertainty in the world concerning whether or not we are going to have measures to make sure that the right level of growth is achieved in South Africa,” said Gordhan.

 

South Africa is going to take a growth friendly strategy along with the consolidation of debt. “What we’re undertaking is monitoring the channels through which South Africa could possibly be impacted upon,” he was quoted saying, adding the fact that this may very well be by way of financial systems. Gordhan said South Africa’s financial regulatory system was basically sound. He explained that South Africa had made it through the first crisis and that “we will ensure we make it through.”

South Africa continues to be cautious about how precisely it borrows money and that it has not asked the general public to pay extra for what it has borrowed. “All of us intend to make certain that we are able to bounce back if required,” said the minister.

Regarding the issue of South Africa’s conditional R2.4 billion loan to Swaziland, Gordhan pointed out that South Africa is going to keep an eye on the situation in that country. He explained that a joint board, following a 2004 agreement, will get together annually or more times if required to monitor the situation.

 

Previously Cabinet spokesperson Jimmy Manyi stated the advance to Swaziland was not a loan from the South African fiscus but a guarantee that is backed by their own South African Customs Union (SACU) payments.

The three tranches to Swaziland is going to be paid dependant upon the proven fact that the Swazi government generates confidence building measures not to mention that fiscal and related technical reforms requested by the International Monetary Fund are put in place and that South Africa offers capacity building support. Additionally it is based on the pillar that there is co-operation in multi-lateral engagements.

Repayment of the loan is going to be carried out by debit order, which will be paid to that country by way of a debit order against the SACU account which happens to be held by South Africa’s Reserve Bank. The money, which will not be taken from taxpayers, is furnished by the Reserve Bank on a 5.5% interest rate.

Source: BuaNews