If You Are a Young Adult Starting Your Career, Using Credit and Debit Cards Is Advantageous
[Asia Economy Reporter Kwangho Lee] This year, as loan regulations have tightened with reduced credit loan limits and higher principal and interest repayment ratios, 'credit management' has become more important than ever. High-credit borrowers advise repaying old loans or loans taken from secondary financial institutions first for effective credit management. For young adults starting their careers, it is recommended to engage in frequent financial transactions and use both credit and debit cards.
Below are some credit management tips shared by high-credit borrowers.
◆ To consistently manage your credit score, you need to understand the evaluation factors = The most important factor in credit management is the credit score. A high credit score lowers bank interest rates, while a low credit score can increase interest rates or even make loans impossible. Financial institutions assess how reliably a borrower can repay money by looking at the credit score, which determines the loan amount and interest rate.
First, to manage your credit score, you need to know the factors reflected in credit evaluation. According to All Credit’s criteria, these include repayment history, debt level, credit transaction period, and credit type. The credit type refers to the form of loans and card usage information. In other words, the loan format and whether there were any delinquencies during repayment are important for credit evaluation.
◆ Applying for automatic transfers is essential... repay the oldest loans first = To manage loans, it is advisable to apply for automatic transfers to prevent interest and principal delinquencies. If you have multiple loans, prioritize repaying the oldest loans rather than those with the largest amounts.
Since older loans can lower your credit score, repaying them helps maintain your credit score. Also, if you have loans from secondary financial institutions rather than primary ones, it is better to repay those first. Having multiple loans can result in loan application rejections, so it is preferable to consolidate debts into a single loan if possible.
◆ For young adults starting their careers, using cards and setting up automatic bill payments is advantageous = Sometimes, credit scores are low even without loans. This is often the case for young adults who have limited financial transactions. In such cases, it is beneficial to engage in frequent financial transactions and use both credit and debit cards.
Additionally, it is advantageous to set up automatic payments for monthly bills such as utilities and mobile phone charges. If you have paid communication fees or national pension contributions for more than six months without delay, submit this information to credit evaluation agencies. You can receive bonus points on your credit score.
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