Do you check your credit card statements frequently? Do you remember to pay your credit card bill just at the last moment? If yes, then it is high time you ask certain credit card questions to yourself. Check out the 4 important credit questions that you should ask yourself and get the answers.
1. What is your total outstanding balance?
You can't have a firm grasp on your finances without managing your debts. You need to have a payment plan in your mind in order to manage your debts efficiently. However, you can devise a payment plan only after calculating your total outstanding balance.
Check your credit report to know the outstanding balance on your credit cards. Once you know your outstanding balance, you can plan your finances accordingly. If your outstanding balance is too high, then you can curb your expenditures.
2. How much are you spending for your debt payments?
You need to figure out the amount spent on your debts every month. You need to know about this amount especially when you're planning to take out a new home loan. Lenders will check your debt-to-income ratio. If your debt-to-income ratio is above 36 percent, then lenders may refuse to approve your loan application.
Make sure you're not spending more than what is necessary on your debts. If you're spending a substantial amount, then you need to embark on a good debt repayment plan.
3. Is your credit score too low or very high?
Usually, people start thinking about credit score at the time of submitting loan application forms. However, credit score is used for various things apart from loans. For instance: employers seldom check your credit score before recruiting you. Insurance companies check your credit score before offering you a quote.
Your credit score depends upon various items that are there on your credit report. So, make sure you use your right to obtain a free copy of your credit report. Visit the website of AnnualCreditReport.com and find out if there is any error on your credit report. One single error can make a big difference to your credit score.
4. What is your maximum credit limit?
It is crucial to know about your credit limit. If you exceed your credit limit, then your credit score will drop. If your total balance is very near to your credit limit, then your score will sink. If your balance is within 30 percent of your credit limit, then your score may go on an upward slide.
In case the credit limit on your credit card is not very high, then there are high chances of having a high credit-utilization ratio. The trick to avoid it is to repay your credit card balance every month. There is yet another thing which you can do. You can attempt to keep your credit-utilization ratio below 30 percent for every card.
Money matters make a significant impact upon your lifestyle. They can affect your health and relationships. So, it is important to know the answers of the vital credit questions. You can direct the anchor of your financial boat in the right path only after getting the right overview of your financial life.