Friday, 20 March 2015

Cash Flow Vs Credit Rating

So, a friend of mine told me last night that your overdraft habits were reported to the credit bureau. This means that the longer you are in and more frequently you delve into said overdraft will affect your almighty credit score. 

She suggested that I pay the minimum on the credit cards, keep them happy and focus on getting out of the overdraft first. In doing this, this will help increase my credit score. I thanked her, grumbled to myself but resolved that I wasn’t going to do this. 

I knew that this would require me to stop or re-arrange my paydown and thereby take longer. I imagined that to do things her way would take me till November or (Gasp!) longer.

I went over my numbers and with the help of a handy spreadsheet (I made) I figured out that I could do it her way within a reasonable time frame. It would only take me till the end of September, rather than August as it is with my plan. Thankfully, it was nowhere near November, as I had feared.

If I do things this way, I will be out of the overdraft and be building up my cash personal reserves first. Then I will be paying down the credit cards, Card#1 first, and then Card #3 trickle saving all the while. I will still trickle-save, but it will be to get myself closer to that goal of having a minimum of $1000.00 in the account at all times. 

After that goal has been achieved then I will save in a high interest savings account as I focus on paying down Wanda and Trea. Never let it be said that I can’t take suggestions, or admit when I screw up. This was not a screw up but rather just a minor altering of my plans to improve them. 

Remember to always be flexible in how you get to your goals, just in getting to them. 

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