13 Dec 2023
Did you know that nearly 40 percent (39%) of British citizens admit to skipping multiple credit payments on debt? Sending money to your family members back in your home country might be one of the major reasons why your credit score is constantly low. This article will tell you how you can maintain a good credit score through effective remittance management.
Your credit score reveals whether you can handle debt. If your score is higher, lenders will think you are a more responsible borrower, and obviously, there will be benefits.
What can you acquire with a good credit score? Better loan terms and simpler approval processes are the simplest yet most important things you get by maintaining a good credit score. Most people will save hundreds of thousands of pounds throughout their lives with a strong or exceptional credit score. Strong credit qualifies a borrower for cheaper rates of interest on mortgages, auto loans, and other types of financing and loans.
Better credit ratings are linked to lower-risk borrowers. On the other hand, lenders are less willing to compete for their business and more businesses can get away with charging high annual percentage rates since people with negative credit are seen as higher-risk consumers (APRs).
Due to the negative impact, it has on your insurance score, having bad credit can also make it challenging for you to get life insurance, rent an apartment, or rent a car.
If your family lives far away from you and you make money transfers for them each month through an assigned credit card, then you are at high risk of losing your credit score. You all understand that keeping family first is crucial, but you should not be doing that at the risk of losing your financial status.
Here are a few effective remittance management techniques that you should apply in your life if you use a credit card to send remittances.
You only get the report when you order your free credit reports from AnnualCreditReport.com. Your actual credit ratings are hidden from you. The purchase of a complete credit report with scores, however, can be advantageous for people who desire to drastically raise their credit scores.
Along with purchased scores, Experian, TransUnion, and Equifax also provide a list of risk factors. Up to 300 risk factors are taken into account when calculating your credit score, so understanding what they are will help you identify areas where you can improve.
You do not necessarily always have to cut up on remittances for the family when trying to improve the score. There are plenty of other factors that may be problematic, and try to handle those first. Getting this report will help you prioritize which area you should work on to maximize your credit score.
Making all of your payments on time would be the one thing you could do to raise your credit score. Your payment history accounts for 35% of your FICO credit score. According to Equifax, even one payment that is 30 days late can cause a person with a good score to see a loss of 90 to 110 points. If the payment is more than 30 days overdue, the effect is significantly more severe.
Your credit report will reflect a late or "delinquent" payment for seven years. Over time, the effect on your final score lessens, but that failing grade still counts.
Make sure you aren't borrowing more than you need for any sort of credit, including your remittances. Never make money transfers just because you have a credit card to pay for it. Always take your future expenses into account before you swipe your card.
You can understand better what you can and cannot afford by creating and adhering to a realistic personal budget. It can even help you plan and prepare for significant future purchases, like a house in your home country.
For personal loans and credit cards, this is very significant. You should endeavor to use no more than 30% of your monthly allotted quota. Even if you always pay your bills in full timely each month, a lender will still presume that you require all of the available credit if they notice that you are utilizing it all.
One of the most effective remittance management strategies is to shift to online money transfers. This is because they are much more convenient and, most importantly, cheaper.
Shifting to a more affordable option will give you an edge in maintaining a good credit score. A huge sum of your remittance amount will not be lost in transfer fees and exchange rates if you shift to ACE. The transactions are fully encrypted, meaning they are safe and secure. The funds will reach your loved ones within an hour, no matter which part of the world they live in.
Increasing your credit score is a long-term process, even though disputing inaccuracies on your credit report or paying off credit card debt can be done immediately. Months may pass before you see drastically altering ratings. Credit reporting companies require evidence of persistent, responsible behavior and trends. Never give up too quickly.
Keep an eye on your credit reports, be sure to pay all of your obligations on time, and work diligently to reduce revolving debt. It might take some time, but it will be worthwhile and you will thank yourself that you did not give up after getting that financial freedom. Use ACE Money Transfer to save on transfer fees and currency exchange, which will help you maximize your credit score through savings. Sign up today for free to make unlimited international money transfers.
Effective remittance management can indirectly impact your credit score by ensuring timely bill payments and responsible financial behavior. Consistently receiving remittances and managing them wisely can reflect positively on your credit history.
Receiving remittances can provide you with a stable source of income, which is a key factor in building a positive credit history. Timely payments on credit cards, loans, and bills using these funds can demonstrate responsible financial behavior to credit bureaus.
Allocate a portion of your remittances to paying off existing debts and bills promptly. Establish a budget to ensure you use the funds responsibly. Avoid accumulating high-interest debt and aim to save or invest a portion of your remittances for future financial goals.
Consider opening a local bank account in your home country or the country where you receive remittances. This can make it easier to manage funds and set up automatic payments for bills. Additionally, using a credit card responsibly can positively impact your credit score.
Regularly check your credit report from credit bureaus to monitor your credit history and verify the accuracy of the information. Pay attention to any negative items and work on resolving them. Several online tools and apps also provide free credit score monitoring services.
Yes, it is possible. Using remittances to establish a credit history by opening a secured credit card or small loan can be a good starting point. Consistently making on-time payments and managing credit responsibly will gradually build a positive credit score.