Financial emergencies happen to almost everyone at some point and they can have devastating impact in your credit. This is particular true in today volatile economy conditions.
Many people have to declare bankruptcy due to huge financial disaster such as sudden unemployment, huge medical bills, a lawsuit or divorce. If they have prepared for such emergency, the adverse effect will be dramatically reduced.
If you want to keep your credit score in good shape, you should start planning what you would do in case of an emergency. Put your plan down in written form so you can review and refine as time goes on.
Here are some items that should be on your financial emergency plan:
1) A list of all assets you could convert to cash quickly. An example will be gold.
2) A list of all extras which will not affect your life during an emergency. This includes magazine subscriptions, cable television, Friday nights at the movies, spa and others.
2) A list of resources you can turn to could to in case of an emergency. This includes insurance or professionals such as a lawyer who deals in financial facets of the law or a severance package in case of retrenchment. Whatever it is writes it down.
3) A list of ways you could raise money in the short term, which includes renting part of your house, mowing lawns for others, giving tuition and so forth.
You should also consider overdraft protection for your bank or credit accounts. This will prevent you from getting a negative record on your credit report or a charge for insufficient funds. In most cases, you have a day or two to add funds into the account to cover the excess withdrawal. Some credit cards companies also offer a similar service, which can protect you in case you lose your job, and are unable to pay for a few months.
Another area to consider is insurance. You should have some form of insurance for your own health, your car, your home, and for liability incurred from an accident or other sudden financial problems. For a small monthly fee, you are covered against unexpected events that can drain your finances and leave you with a huge debt.
If you do not have a plan yet, start today. It is never too late to prepare for emergencies. You will thank yourself should you ever encounter a financial disaster in the future.
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1 comment:
According to me financial credit score is very important score for repay your loan on time which affects whether you will get loans, mortgages, or credit cards. There are some ways to protect your financial credit scores such as don't cross your credit card limits, mortgage loan is having a major impact on the credit score, if you have such loans always pay it on time. If you are in debt then try to reduce as soon as possible and bankruptcy will greatly effect your credit score. So, always check your credit statement and have look on your financial score. For more details on financial credit score refer http://www.prime-targeting.com/ways-to-protect-your-financial-credit-score/
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