A lot of people worry about their credit score. Credit scores are notorious for determining your ability to have future loans and to get insurances. A bad credit score might send you in a downward spiral of even more debt especially if you weren’t able to plan your finances well.
According to investment strategist Sean Seshadri, there are many reasons why people get into bad credit scores. Here are the following things to avoid when you are trying to improve your credit score:
Getting a loan that’s above your paying means.
- Getting a loan that’s above your paying means. Do not get a loan that you aren’t sure of realistically paying well. This can affect your credit score, especially if you cannot pay on time.
Paying for everything in cash.
- Paying for everything in cash. Not having a bad credit history is good. However, no credit history by paying everything in cash gives you no record at all. If you pay for everything in cash, there’s a chance that some banks won’t trust your payment capabilities.
Regularly checking your credit score in paid methods.
- Regularly checking your credit score in paid methods. Monitoring your credit score is a good habit. However, there are free ways to do this without affecting your credit score. You can try out applications such as Credit Karma, Mint, or Sesame.
Thankfully, there are ways to improve your credit score, and this is through investments. This article shows you the reasons why investments can be good news for your credit score.
4 Ways Investments Can Help Your Credit Score
The right investments can improve your income
Sean Seshadri emphasizes the importance of the right investments. With the help of investment strategies, you can leverage your present income to create even more passive income. This can be done through mutual funds, stocks, bonds, or other options. Having more income means that you can increase your chances of paying off an existing loan, which improves your credit score.
Good investments can also help you pay off existing debt
Many would think that the only way to pay off debt is through working more and more jobs. Sadly, this process is not sustainable because you only have enough hours in a day. You cannot keep on taking jobs that you cannot do anymore. The best way to pay off the debt in the most efficient way is by placing your money in good investments.
Good investments that bring exponential returns can increase your chances of paying off debt. Although there are no guarantee investments, there are some options which have low-risk options for people who want to get steady returns.
Passive investments help you worry less about income
If you can spot an investment opportunity that gives passive returns, you will have lesser anxiety thinking about the income that you’re getting from several streams. Whether you are keeping a job or a business, having a growing investment is one less thing to think about.
The problem with some people is that they are juggling too many things at once, and forget to pay off some loans because of neglect. Having one less thing to worry about gives you the ability to stay on top of your finances.
Good investments also help you place your money in an earning cycle
Naturally, people who have good credit have more spending power–they can take out loans on their housing, vehicles, or even start a business. Starting a sound investment strategy can help you place your money in an upward cycle, which allows you to earn more and make further investments that improve your credit score.
For example, a person who is working a full-time job invested $1000 in stocks. The stocks earned enough that it made a double return. He can use this money to start paying a business loan and wait for his business to start becoming profitable. This entire process can improve his credit score.
Being an investor isn’t just a “see what happens” occupation. You must be educated and learn from mentors to cover your bases for the proper investments.