There are equally simple and concrete steps you can take to make borrowing more efficient, and reduce any repayment risks you might encounter over the life of the loan. These steps also have the added bonus of helping to improve your credit over time.Whatever type of debt you’re assuming, seeking out the lowest interest rate possible ensures that you’ll pay less over the life of the loan, and thus bear lower risk of delinquency or default should you encounter financial difficulty.
Do make more than the minimum payments on loans, as this will result in you paying significantly less interest over the life of the loan. A simple trick for this involves making bi-weekly, instead of monthly payments on your loan. As an example, if your monthly student loan bill is $400, pay $200 every other week, instead. If you used the traditional monthly payment method, you’d pay $400 x 12 months=$4,800 per year. Under the bi-weekly method, you’d pay $200 x 26 bi-weekly periods yearly=$5,200 per year. You’re making an extra full month of payments while barely even noticing it.
to your overall available credit. A ratio over 30% lowers your credit score. It also means you’re simply living on too much credit and likely facing financial difficulty. Your credit utilization ratio comprises a significant portion of your credit score calculation, and keeping it below 30% yields you the greatest points.