Every consumer in the nation has heard the terms Chexsystems and bad credit. Such terms are a nightmare to the consumer, because they prevent those people from getting some key items that they need. A bad consumer report prevents people from being granted reasonable car loans, mortgages, shopping cards and the like. A poor report from Chexsystems will cause a bank to deny a person a checking or savings account. To avoid these situations, one can follow this simple guideline of the 10 best ways to prevent either situation.
Keep Records of Bank Transactions
Most transactions that lead to a consumer being placed on the Chexsystems report involve poor balance estimations and high banking error fees. One of the best ways to prevent either of those situations is to use a balance sheet and record every transaction accurately.
Keep a Bank Account Padded
A good way to help prevent overdrawing an account is to keep it padded with at least $50 that the consumer will not spend. This $50 can cover any accidental miscalculations or small emergencies, so that the consumer never has to worry about going over.
Sign up for Overdraft Protection
Most banks offer some type of overdraft protection to increase the banking error margin. Some banks allow consumers to connect their checking accounts to a savings account, while others will offer them a separate credit line. Using this service can save a person from ending up on the C list with a canceled account.
Correct Negative Balances Immediately
If a problem does occur with an overdraft or bounced check, the consumer’s best option is to take action immediately. Fees increase when some bank accounts obtain negative balances. The longer the customer waits to pay the balance, the harder it will be to pay save the account. Eventually, the bank will close the account and report him or her to Chexsystems.
Check the Bank Account Frequently
Staying on top of one’s balances is a great way to avoid mistakes. Many times, the bank will impose monthly fees and other deductions that will cause a balance to decline. A consumer who logs in to online banking every day can prevent an accidental overdraft situation. Additionally, that person might be able to make a move to fix something before the fees hit the account.
Use Credit Cards Sparingly
Using credit cards only when it is completely necessary helps the consumer to maintain a positive credit profile. To avoid a poor profile, one should only use 50 percent of the available balance or less. Additionally, a person’s first step to purchase something should primarily involve cash. A plastic card should be an alternative method rather than a daily practice.
Pay Bills on Time
Although it may seem like common sense to pay credit card bills on time, late payments are one of the leading reasons that people have poor reports. Some bill payments take three days to process. Therefore, the consumer should make a card payment at least three days before the due date, so that the payment has time to post to the account. Late payments affect a report more than most other actions.
Figure Disposable Income
Another top reason that people receive poor ratings is lack of calculating. Some consumers go over their budget, because they did not take the time to calculate disposable income. This income is the amount of money a consumer has left after paying household bills. One of the golden rules of finance is to avoid borrowing money if you cannot pay it back. Those who do not have enough disposable income should not take loans.
When times get rough, but the consumer’s worthiness score is still intact, he or she can apply for a consolidation loan. A consolidation loan can get a consumer the best interest rates. It will also help that person to organize finances and gain relief from the stress of paying multiple lenders. Many times, the ease of the consolidation process will save the customer from falling down financially.
Access Credit Reports Once per Year
One should obtain a report every year to review the items that the bureaus have place on it. Anyone can dispute an account that he or she does not recognize or agree with. The bureaus will remove any account the merchant cannot validate with documentation.
Just following these 10 steps can help a consumer a great deal. To avoid the aforementioned negative consumer labels, one must practice smart spending and effective bank account management.