5 Everyday Things That Hurt Your Credit

Heres one of the tricky things about credit scores: Theyre about more than credit. Sure, its extremely important to make loan payments on time and use credit cards responsibly, but there are plenty of non-credit things that can do serious damage to your scores, potentially making it more difficult to get loans at an affordable rate in the future.

Your credit score may not be top of mind while youre driving to work or browsing the Internet, but if youre not careful, you could jeopardize your financial future when you least expect its at risk.

1. A Ticket

You know that sinking feeling you get when you see a police cars lights turn on in your rearview mirror or you approach your car after dinner and see a piece of paper under the windshield wiper? Yep, youre getting a ticket, which means at least a fine, if not something worse.

Spare yourself further stress by taking action immediately. Either pay the fine or start the process of contesting the charge, because letting the ticket sit unpaid could come back in a seriously unpleasant way: The fine might be sent to a debt collector, which results in a collection account on your credit report. That will hurt your credit score for a long time, which will likely end up costing you more than it would to pay the ticket in the first place. The same goes for unpaid late fees for library books and rental movies, though these days the latter are a lot less common than traffic violations.

2. Unpaid Tolls

With electronic tolling, its so easy to breeze past the toll booth without paying. Whether or not you do it on purpose (and plenty of people do), theres likely an online option for paying missed tolls, which you should immediately use. Youll be billed for unpaid tolls at the address your car is registered, and if you dont pay that or somehow miss the notice, youll probably end up seeing it on your credit report as a collection account.

For something that costs a few cents or dollars, its absurd to let missed tolls hurt your credit score.

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3. Your Credit Cards

Its sometimes hard to remember this, but when you pull out your credit card to pay for dinner, youre making a decision that affects your future: If that transaction drives up your balance enough, it could hurt your credit utilization rate. Should you fail to pay that credit card bill later on, your credit score will take a serious hit.

It may seem trivial at the time, but when youre trying to buy a home or take out an auto loan, youll want to apply with the highest credit score you can.

4. Your Pet

Pets are adorably unpredictable — and that can be ridiculously expensive. Sometimes they cause costly damage, which can put you in debt to repair (or your landlord could send you to collections for unpaid damages), and their healthcare can be quite pricey, as well. Surgeries for animals often cost thousands of dollars, and if youre not prepared for such emergencies, youre probably looking at some debt or credit problems as a result.

5. The Wrong Email

Hacking can lead to identity theft, which can lead to credit issues. It can be as simple as clicking the wrong link in an email or downloading an inconspicuous attachment: If an ill-intentioned intruder has access to the information in your email, he might be able to steal your identity, which someone can use to open credit cards, take out loans, start utilities — anything — using your name. It sometimes takes years to recover from the damage identity thieves cause, so even though we check email dozens of times a day, you need to remain security-minded when you use it.

You may not even know some of these everyday things are hurting your credit if you havent been checking your credit reports. Which is why its a good idea to make it a habit to check your credit reports at least once a year you can get your free annual credit reports from each of the major credit reporting agencies. And if you really want to keep an eye on your credit, you can get your credit scores on a regular basis, and any large, unexpected change is a big clue to a potential big problem on your credit reports. Credit.com gives you two of your credit scores for free, updated every month, along with an overview of what factors are influencing your scores.

More on Credit Reports and Credit Scores:

  • What’s a Good Credit Score?
  • What’s a Bad Credit Score?
  • How Credit Impacts Your Day-to-Day Life

Image: Daniel Deitschel

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5 Everyday Things That Hurt Your Credit

Here’s one of the tricky things about credit scores: They’re about more than credit. Sure, it’s extremely important to make loan payments on time and use credit cards responsibly, but there are plenty of non-credit things that can do serious damage to your scores, potentially making it more difficult to get loans at an affordable rate in the future.

Your credit score may not be top of mind while you’re driving to work or browsing the Internet, but if you’re not careful, you could jeopardize your financial future when you least expect it’s at risk.

1. A Ticket

You know that sinking feeling you get when you see a police car’s lights turn on in your rearview mirror or you approach your car after dinner and see a piece of paper under the windshield wiper? Yep, you’re getting a ticket, which means at least a fine, if not something worse.

Spare yourself further stress by taking action immediately. Either pay the fine or start the process of contesting the charge, because letting the ticket sit unpaid could come back in a seriously unpleasant way: The fine might be sent to a debt collector, which results in a collection account on your credit report. That will hurt your credit score for a long time, which will likely end up costing you more than it would to pay the ticket in the first place. The same goes for unpaid late fees for library books and rental movies, though these days the latter are a lot less common than traffic violations.

2. Unpaid Tolls

With electronic tolling, it’s so easy to breeze past the toll booth without paying. Whether or not you do it on purpose (and plenty of people do), there’s likely an online option for paying missed tolls, which you should immediately use. You’ll be billed for unpaid tolls at the address your car is registered, and if you don’t pay that or somehow miss the notice, you’ll probably end up seeing it on your credit report as a collection account.

For something that costs a few cents or dollars, it’s absurd to let missed tolls hurt your credit score.

3. Your Credit Cards

It’s sometimes hard to remember this, but when you pull out your credit card to pay for dinner, you’re making a decision that affects your future: If that transaction drives up your balance enough, it could hurt your credit utilization rate. Should you fail to pay that credit card bill later on, your credit score will take a serious hit.

It may seem trivial at the time, but when you’re trying to buy a home or take out an auto loan, you’ll want to apply with the highest credit score you can.

4. Your Pet

Pets are adorably unpredictable –and that can be ridiculously expensive. Sometimes they cause costly damage, which can put you in debt to repair (or your landlord could send you to collections for unpaid damages), and their healthcare can be quite pricey, as well. Surgeries for animals often cost thousands of dollars, and if you’re not prepared for such emergencies, you’re probably looking at some debt or credit problems as a result.

5. The Wrong Email

Hacking can lead to identity theft, which can lead to credit issues. It can be as simple as clicking the wrong link in an email or downloading an inconspicuous attachment: If an ill-intentioned intruder has access to the information in your email, he might be able to steal your identity, which someone can use to open credit cards, take out loans, start utilities — anything — using your name. It sometimes takes years to recover from the damage identity thieves cause, so even though we check email dozens of times a day, you need to remain security-minded when you use it.

You may not even know some of these everyday things are hurting your credit if you haven’t been checking your credit reports. Which is why it’s a good idea to make it a habit to check your credit reports at least once a year — you can get your free annual credit reports from each of the major credit reporting agencies. And if you really want to keep an eye on your credit, you can get your credit scores on a regular basis, and any large, unexpected change is a big clue to a potential big problem on your credit reports. Credit.com gives you two of your credit scores for free, updated every month, along with an overview of what factors are influencing your scores.

More From Credit.com

Whats a Bad Credit Score?
Whats the Easiest Way to Improve Your Credit?
Does Checking My Credit Score Hurt My Credit?

Christine DiGangi covers personal finance for Credit.com. Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News Record. More by Christine DiGangi

4 Hobbies That Could Wreck Your Credit Score

In our busy
and hectic world, finding a way to relax is essential. Picking a hobby you
enjoy and engaging in it regularly is a great way to wind down from a tough
week.

But if you’re
not careful, there’s a chance your favorite diversion could hurt your credit score. Below are four
popular pastimes that could put your score in jeopardy if you make the wrong
moves. Use these tips to keep your credit on the straight and narrow, no matter
how you like to spend your free time.

1. Traveling

If exploring
an exotic locale is your favorite way to get away from it all, you’re probably
planning for your next trip right now. Plotting where to go, finding the best deal on a flight, learning about
the local culture of the destination you’re headed to – it’s a great way to
while away the hours after work.

When it’s
finally time to take off on an adventure, the temptation to forget about life
back home is hard to overcome. This is why a case of wanderlust can potentially
hurt your credit score: It’s easy to neglect a bill payment when you’re out of
your usual routine.

Since payment
history makes up 35 percent of your FICO credit score (the score most widely used in the United
States), failing to pay your bills on
time could cause it to drop substantially. To avoid this fate, it’s wise to
set up email or text reminders for your billing due dates so that you’ll know
when it’s time to pay, no matter where you are in the world. You could also opt
into automatic payments, which will take the matter out of your hands entirely
and make it easier to enjoy your time away.

2. Shopping

Fashionistas
agree: Shopping for a funky new outfit and then scoring a great deal on it
provides a lot of satisfaction. And with online shopping, it’s easy to engage
with this hobby whenever the urge strikes.

But this can
be a blessing and a curse when it comes to your credit. Thirty percent of your
FICO score is determined by amounts owed, and your credit utilization heavily
influences this category. Your utilization is calculated by dividing the
outstanding balance on your cards by the total amount of credit you have
available. Most personal finance experts recommend keeping it below 30 percent.

If you’re
doing so much shopping with your credit cards that your credit utilization ratio meets or exceeds this threshold at any point during the month, your credit
score could take a hit. Your best bet is to monitor your balance carefully and
make a payment if it’s getting too high.

Another
option is to spread your monthly spending between a few cards so that your
utilization on each one stays low. Just be sure to pay them all off in full by
their billing due dates to avoid interest charges.

3. Reading

Getting lost
in a good book is a popular pastime for many. And if you’re in the habit of
borrowing your weekly read from the
local library, good for you – you’re saving a bundle on book purchases.

Just be sure
to return your books on time. It has become common practice for libraries to
turn large, unpaid overdue fees over to collections agencies. If this happens,
there’s a good chance that the collector will report your lack of payment to
the credit bureaus. This will put a black mark on your credit report that could affect your credit score for up to seven
years.

Although most
credit scoring models ignore collections accounts less than $100, it’s not
impossible that an avid reader could rack up a fine exceeding that amount. If
you do, pay the fee promptly. Otherwise, your credit score could be at risk.

4. Gardening/home improvement

If working on
your home or garden is your favorite way to relax, you’re probably making
frequent trips to major home improvement warehouse stores. If so, you might have considered applying for the
retail credit cards offered by these big-box merchants. While in some cases
it might make sense to do so, it’s a bad idea to finance a big project by
opening several cards at once – this could spell trouble for your credit.

Ten percent of your FICO
score comes from new credit applications. Too many in the span of a few months
is problematic because it’s perceived as a signal you’re in financial trouble.
Waiting about six months between credit card
applications is
wise for most people. If your score isn’t in good shape to begin with, you
might be better off putting as much as a year between new requests. Follow this
guideline to keep a kitchen remodel or a backyard overhaul from demolishing
your credit.

How to improve your credit score

How to improve your credit score

Category:
Loans
Date:
21/10/2014

Are you thinking about applying for credit? If so, you need to make sure your credit score is in order. Lenders will rate your credit profile to see if youre a suitable candidate before youll be accepted for that loan, credit card or mortgage, and having no credit history at all can be just as detrimental as having a less-than-perfect one. But, there are ways you can improve your credit score to boost your chances of being approved…

  • Make sure youre registered at your current address. A lot of lenders use the electoral roll for identity verification in order to combat identity fraud, so if youre not registered to vote at your current address, its highly likely that youll be automatically rejected. So, make sure youre registered with the electoral roll at the correct address before you even think about applying for credit.
  • Build up a credit history. Lenders will look at your previous credit information to decide if youre a suitable candidate, and your history becomes even more important if youre making a particularly hefty request (such as applying for a mortgage). But, if youve never had a credit card, loan or overdraft, you wont have a credit history, and this could pose difficulties – how will lenders know whether or not youre a credit risk if they cant evaluate your past performance? This means that if you want to secure that credit agreement, its worth establishing a positive credit history by taking out a credit or store card first. Doing so can prove your money management skills and can be a great way to build up your score, but of course, youll need to pay off the cards balance in full each month.
  • Keep balances as low as possible. Try not to have credit card balances that are more than 30% of your limit – doing so could be an indication to lenders that you already use too much credit and may not be able to keep up with additional repayments, which could lead to your application being rejected. As a general rule of thumb, keep balances as low as possible, while still using a bit of your limit to prove your credit-worthiness.
  • Close any account that isnt needed. Lenders are paying increasingly close attention to the amount of credit available to an individual, and if it seems youve already got access to a lot, they may be reluctant to offer you any more. That means any accounts you dont use or need should be closed as soon as possible by, for example, cancelling a credit card that youve paid off and will no longer be using.
  • Stop applying! If youve been refused credit by a lender, dont keep applying elsewhere. Each credit search will leave a footprint on your file and too many in a short space of time could indicate that youre financially over-stretching yourself (or, perhaps, that youre desperate for money and could be a credit risk), and that means they may not approve your application.
  • Keep on top of your credit score. Its a good idea to regularly check your credit score to make sure everything is as it should be, particularly if youre thinking of applying for a mortgage (or other large credit agreement) in the near-future, and if it isnt as peachy as hoped, youll know the areas you should focus on to improve it. Itll also highlight any discrepancies, and if you dont agree with anything on your file, contact the credit reference agency. If youve been refused credit, you should get a copy of your credit report to check it over, and if you dont agree with anything (such as CCJ settlements not being recorded, or even fraudulent activity), make sure to contact the agency to put things right – updating your file with the correct information could help ensure you wont be refused credit in the future.

What next?

Compare credit check providers

Muthoot Finance Launches Housing Loan Down Payment Product

Muthoot Finance has launched a new scheme to finance margin money needed to avail of home loans. As per norms, a home loan borrower has to contribute 20 per cent margin money (equity) to avail a housing loan for up to 80 per cent of the propertys value.

Many prospective home buyers fail to get a housing loan because they do not have margin money that runs into several lakhs.

The new product will cater to home loan seekers, who have difficulty in paying the margin money upfront, the companys AGM (marketing) Avinav Chaubey said.

The product, designed for the down payment of a new property or renovation or extension of an existing property, will have a repayment period of five years. No property or income documents are required, he added.

The rates under the new scheme are cheaper as compared to personal loans, Muthoot Finance said. Under the plan, customers can avail a loan of Rs 1 lakh to Rs 10 lakh at an interest rate of 11 per cent interest rate for a period of 12 to 60 months.

Muthoot has also launched a new consumer loan scheme to offer convenient credit options to customers for buying consumer durables. The EMI-based loan service can be cleared within 36 months, the company said. The scheme does not include any Negative Area concept – a ground used by many lenders to reject loan applications.

Muthoot will provide instant finance, up to 100 per cent of the product value, without the need of CIBIL score or credit card. There are no processing charges and an exclusive zero down payment facility is offered to all customers, the company said.

(With inputs from PTI)

How to avoid the credit mistakes 20-somethings make

The world of credit and finances can be daunting when youre in your 20s and just setting out on your own. Many of us tend to avoid those areas of our lives that are a bit scary, but keep in mind that your credit and finances are two of the most dangerous areas to ignore. So lets agree to face these fears, and avoid making the mistakes that could haunt you for many years to come.

In my experience, I see mainly two kinds of 20-somethings, those who steer away from having any kind of credit and thus have yet to build a credit score and history; and those who take any and every credit offer available to them, rack up huge debts and will wake up sometime in their 30s deep in financial trouble and even deeper in regret.

Whats wrong with both of these scenarios? Perhaps the worst mistake of all: a lack of planning for the future. Whether youre ready for it or not, your future will come and when it does (usually quicker than expected), you will likely want to buy a home, maybe a new car, perhaps even help your future kids through school and maybe even leave a financial legacy that will outlast your time here. If you want any or all of these things you need to have a plan now.

Establish a Good Credit History

If you dont have credit or a credit score, you can start small by getting a store credit card or a secured credit card. Pay one of your regular monthly bills like your cellphone bill with it. Pay off or pay down the balance each month making sure to keep the balance below 20 percent of the total available credit line. This is a good way to optimize the Amount of Debt factor of your credit score, which accounts for about 30 percent of your score. Make all your payments on time, because your payment history makes up 35 percent of your credit score. Over time, this will lead to a good, strong credit history.

If you have a lot of credit card debt and are having trouble making your payments, try to focus on paying down all of your balances to 20 percent or less of your available credit. It may help to focus on paying down one account at a time while maintaining on-time, minimum payments on all the others. If you have trouble with spending too much, stop carrying your credit cards while you pay down balances.

Maintain Healthy Credit and Finances

Once you have begun to establish a healthy credit history, you just need to continue doing the right things. To keep improving your credit score and building a credit history worthy of a home mortgage you will need an established, long-running reputation of conservative borrowing and on-time payments.

So how do you know if your efforts are leading to good credit? You can find out by pulling your credit reports regularly and make sure theyre accurate you can get them for free every year from the major credit reporting agencies. You can also track your credit scores to follow your progress. Credit.com offers two of your credit scores for free, along with an overview of how your credit file is affecting your scores, and a plan to help you work your way toward better credit.

Yes, your 20s is the best time to get in the habit of managing your credit, finances and life responsibly. Good luck! And if you have any questions, please let me know. Im here to help you every step of the way.

More from Credit.com

How to Improve Your Credit Score
Does Checking My Credit Score Hurt My Credit?
What#39;s a Good Credit Score?

Happy with your credit score? Don’t let one of these mistakes unravel it

Achieving a credit score you can be proud of is a big accomplishment. But it’s important to remember that good credit is a journey, not a destination. You have to keep making the right money moves to hold onto that score you’ve worked so hard to attain.

Here are three common mistakes that could cause your good credit to unravel fast – be sure to avoid them if you want to keep your score on the straight and narrow!

SEE ALSO: Credit cards: Here’s what not to do

1. Paying a non-credit bill late

Most people know that paying their bills on time is the key to achieving good credit. After all, payment history makes up 35% of your FICO score, so it’s smart to focus on getting those bills in by their due dates.

Yet, many people mistakenly believe that only credit-related bills (like loans) will affect their scores. This sometimes leads them to be careless about paying non-credit bills (like rent or utilities) on time.

But this is a really bad idea. It’s true that most utility companies and landlords don’t report your payments to the three major credit bureaus on a monthly basis. However, if you get behind on one of these bills, your account could get turned over to a collection agency. This will likely result in a black mark on your credit report that could stick around for as long as seven years.

The takeaway? Pay all your monthly bills on time, no matter what.

2. Applying for too much credit at once

If you’ve struggled to get approved for credit in the past because of a low score, you might think that now is the perfect time to apply for a few new cards. But not so fast – 10% of your credit score is determined by new credit inquires. The FICO model interprets several card applications in a short period of time as a sign of financial instability and, therefore, credit risk. Your score could take a hit as a result.

It’s tough to say exactly how much space you should put between credit card applications to avoid doing damage to your score – this really depends on your individual credit profile. For most people, getting a new card every six months or so is usually safe.

And be sure you’re only applying for credit you actually need. Getting every hot card that hits the market isn’t a good long-term strategy.

SEE ALSO: 3 ways your credit card could be your ticket to a great credit score

3. Not paying attention to your credit utilization

Many people think that as long as they’re paying their credit card bills on time and in full, they have nothing to worry about, credit score-wise. While it’s true that these are two important steps to good credit, there’s something else to keep in mind: your credit utilization ratio.

This number is calculated by dividing the amount you owe on your card(s) by the total amount of credit you have available. So, if you have a credit card with a limit of $5,000 and your current balance is $2,000, your credit utilization ratio is 40%.

It’s important to keep your credit utilization ratio below 30% at all times, because the 30% of your credit score determined by amounts owed is heavily influenced by this number. Even if you end up with a $0 balance on your card at the end of every month, your issuer might report what you owe on your account before you make a payment. This could end up hurting your score, even though you’re not carrying a balance from month to month.

Your best bet is to monitor your balance carefully throughout the month, and make a payment if you start creeping above the 30% utilization mark on any of your cards. This one little trick will go far in keeping your score intact, so be sure to keep it in mind.

Lindsay Konsko writes about credit, credit cards, and other personal finance topics for NerdWallet. Our tools and resources empower consumers to make informed financial decisions.

Avoiding credit mistakes 20-somethings make

The world of credit and finances can be daunting when youre in your 20s and just setting out on your own. Many of us tend to avoid those areas of our lives that are a bit scary, but keep in mind that your credit and finances are two of the most dangerous areas to ignore. So lets agree to face these fears, and avoid making the mistakes that could haunt you for many years to come.

In my experience, I see mainly two kinds of 20-somethings, those who steer away from having any kind of credit and thus have yet to build a credit score and history; and those who take any and every credit offer available to them, rack up huge debts and will wake up sometime in their 30s deep in financial trouble and even deeper in regret.

Whats wrong with both of these scenarios? Perhaps the worst mistake of all: a lack of planning for the future. Whether youre ready for it or not, your future will come and when it does (usually quicker than expected), you will likely want to buy a home, maybe a new car, perhaps even help your future kids through school and maybe even leave a financial legacy that will outlast your time here. If you want any or all of these things you need to have a plan now.

Establish a good credit history

If you dont have credit or a credit score, you can start small by getting a store credit card or a secured credit card. Pay one of your regular monthly bills – like your cellphone bill – with it. Pay off or pay down the balance each month making sure to keep the balance below 20% of the total available credit line. This is a good way to optimize the Amount of Debt factor of your credit score, which accounts for about 30% of your score. Make all your payments on time, because your payment history makes up 35% of your credit score. Over time, this will lead to a good, strong credit history.

If you have a lot of credit card debt and are having trouble making your payments, try to focus on paying down all of your balances to 20% or less of your available credit. It may help to focus on paying down one account at a time while maintaining on-time, minimum payments on all the others. If you have trouble with spending too much, stop carrying your credit cards while you pay down balances.

Maintain healthy credit and finances

Once you have begun to establish a healthy credit history, you just need to continue doing the right things. To keep improving your credit score and building a credit history worthy of a home mortgage you will need an established, long-running reputation of conservative borrowing and on-time payments.

So how do you know if your efforts are leading to good credit? You can find out by pulling your credit reports regularly and make sure theyre accurate – you can get them for free every year from the major credit reporting agencies. You can also track your credit scores to follow your progress. Credit.com offers two of your credit scores for free, along with an overview of how your credit file is affecting your scores, and a plan to help you work your way toward better credit.

Yes, your 20s is the best time to get in the habit of managing your credit, finances and life responsibly. Good luck! And if you have any questions, please let me know. Im here to help you every step of the way.

More from Credit.com

How to improve your credit score
Does checking my credit score hurt my credit?
Whats a good credit score?

Credit.com is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

UNEMBARGOED: Shuttleworth case has greater implications

THE decision of the Supreme Court of Appeal to award information technology entrepreneur and billionaire Mark Shuttleworth his money back plus interest could have far greater implications than may appear on the surface.

One of the success stories of the Trevor Manuel-Pravin Gordhan combination as finance minister and South African Revenue Service commissioner respectively was to convince us to let the government take whatever amount of money it wanted from our bank accounts without having to explain too much. Correctly, many South Africans regard tax evasion as a serious matter but our spirit of compliance has been misused for quite some time.

In addition to levying income taxes and other duties, which all of us have to pay, the government has taken to relying entirely on tax to avoid doing the rest of the work it is supposed to do. The nub of Shuttleworth’s case was that tax is not a control measure and must not be used as one.

The Reserve Bank could have, for instance, simply instituted a rule that prevents individuals from transferring out of SA more than a given amount of money in a defined period. The government chose not to do this, and instead imposed a punitive tax, which it then went on to deny was a tax. This attitude is not surprising because it has pursued a questionable philosophy for some time, and got away with it. Hopefully this plunder shall continue no more.

Here are a few examples. Some years ago it imposed an emissions tax on cars. This tax is built into the price of a car and increases according to the carbon emissions level of the engine size concerned. This means a BMW X5 with an 8-cylinder engine elicits a higher tax than a 4-cylinder vehicle.

The intention is to discourage people from buying cars with large engines, which hasn’t worked so far, of course. The tax is still there, however, with no mention of what other measures and incentives are going to be put in place to stop this continuing damage to the atmosphere.

If the intention is to prevent environmental damage, then surely the government must be worried. It could outlaw passenger cars with big engines completely, a step I would agree with. I doubt they will be doing this anytime soon, however, because tax revenue gets affected.

There is another massive cash cow on the way, the carbon tax. The intention is equally noble — to promote correct attitudes and behaviours in industrial firms. Sasol and Eskom are the two biggest polluters in the country at the moment, but there are others.

Smelting and refining installations are the other culprits, as are cattle and the copious amounts of methane gas they emit, but cows can’t pay tax so let’s give them a break.

Once again there are instances where there are alternative technologies that can be used in order to save the environment from permanent damage. In other instances there are no alternative technologies. Smelting and refining are constantly improving but for now there is no other way.

This means that despite the best intentions of companies to behave correctly, it is simply impossible to comply, so they end up paying the tax. Again, this would swell the coffers of government and support the fiscus (in the very short term) but not solve the problem. The greenhouse gases will continue being chucked into the sky at exactly the same rate they were the day before the tax became effective.

After a decade we would have collected and spent a lot of money but not solved the problem. There are those, like me, who would accept the tax if it were to be ring-fenced and used for renewable and clean energy research to build the capacity to solve the problem permanently. We could also use some of it to invest in the green economy Economic Development Minister Ebrahim Patel appears to be so passionate about. This suggestion is unlikely to succeed because that is just not government’s philosophy.

The last example pertains to the so-called sin taxes on alcohol and tobacco. Once more the intention appears to be noble but the blunt instrument is arbitrary and borders on irrationality in its application. Alcohol abuse is so high Health Minister Aaron Motsoaledi must be developing a chronic ulcer. It is also hugely damaging when one considers the violence, car accidents and relentless tragedies visited upon families every day.

I suspect Police Minister Nkosinathi Nhleko is frustrated with the level of violence at social gatherings where drunk acquaintances and friends elect to kill and maim one another. He may prefer that people were educated about the dangers of alcohol, and those who already abused it taken to rehabilitation programmes so that his police can focus on other, equally serious crimes, but this is unlikely.

One would think a sizeable portion of these taxes would be used for education and rehabilitation programmes, but no. Why do that when you can just tax people who don’t even care and use the money to pay for everything else?

I hope the Shuttleworth case begins a necessary discussion about how the government uses its power to levy taxes and the purpose for which those taxes get used. Some say taxes don’t work like that, but that is rubbish. How they work now is a result of a decision, which can be altered if good reasons arise.

How to Avoid the Credit Mistakes 20-Somethings Make

The world of credit and finances can be daunting when you’re in your 20s and just setting out on your own. Many of us tend to avoid those areas of our lives that are a bit scary, but keep in mind that your credit and finances are two of the most dangerous areas to ignore. So let’s agree to face these fears, and avoid making the mistakes that could haunt you for many years to come.

In my experience, I see mainly two kinds of 20-somethings, those who steer away from having any kind of credit and thus have yet to build a credit score and history; and those who take any and every credit offer available to them, rack up huge debts and will wake up sometime in their 30s deep in financial trouble and even deeper in regret.

What’s wrong with both of these scenarios? Perhaps the worst mistake of all: a lack of planning for the future. Whether you’re ready for it or not, your future will come and when it does (usually quicker than expected), you will likely want to buy a home, maybe a new car, perhaps even help your future kids through school and maybe even leave a financial legacy that will outlast your time here. If you want any or all of these things you need to have a plan now.

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Establish a Good Credit History

If you don’t have credit or a credit score, you can start small by getting a store credit card or a secured credit card. Pay one of your regular monthly bills – like your cellphone bill – with it. Pay off or pay down the balance each month making sure to keep the balance below 20% of the total available credit line. This is a good way to optimize the “Amount of Debt” factor of your credit score, which accounts for about 30% of your score. Make all your payments on time, because your payment history makes up 35% of your credit score. Over time, this will lead to a good, strong credit history.

If you have a lot of credit card debt and are having trouble making your payments, try to focus on paying down all of your balances to 20% or less of your available credit. It may help to focus on paying down one account at a time while maintaining on-time, minimum payments on all the others. If you have trouble with spending too much, stop carrying your credit cards while you pay down balances.

Maintain Healthy Credit and Finances

Once you have begun to establish a healthy credit history, you just need to continue doing the right things. To keep improving your credit score and building a credit history worthy of a home mortgage you will need an established, long-running reputation of conservative borrowing and on-time payments.

So how do you know if your efforts are leading to good credit? You can find out by pulling your credit reports regularly and make sure theyre accurate – you can get them for free every year from the major credit reporting agencies. You can also track your credit scores to follow your progress. Credit.com offers two of your credit scores for free, along with an overview of how your credit file is affecting your scores, and a plan to help you work your way toward better credit.

Yes, your 20s is the best time to get in the habit of managing your credit, finances and life responsibly. Good luck! And if you have any questions, please let me know. I’m here to help you every step of the way.

More on Credit Reports and Credit Scores:

  • What’s a Good Credit Score?
  • How to Get Your Free Annual Credit Report
  • How Credit Impacts Your Day-to-Day Life

Image: Ammentorp Photography

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