Tuesday, November 1, 2011

Improving Your Credit Score

Your Credit Score is probably the most important number associated with you. More important than your Social Security number, even. How can this be?

Your Credit Score tells things about you like if you are responsible, if you are a good person to loan money to, what your interest rate will be, if you will be hired for that big job. Your Credit Score is suppose to be gauge for risk factor for anyone who is going to be loaning you money, or even hiring you. Of course, there are circumstances when your score may be out of your control, but those moments are what we call life.

There are many reasons your score may not reflect you in a positive way. Medical bills and unpaid bills are 2 of the biggest reasons I have found to be an issue for most people. That, along with a lack of credit. Yup, not having "enough credit" is a bad thing too. To find that "perfect" balance, here are some tips:

- Pay your bills on time. Paying bills on time, for my clients, is often an issue because if they had the money to pay their bills on time they wouldn't need me. Paying your bills on time is important because it builds a history of being financially responsible. Even if you are only paying the minimum amount due, make sure it's on time. If you can't pay a bill on time, call and let the company know. They will probably work with you.

- Having a credit card is important in your Credit Score. Having a credit card does a couple things for you. Part of your credit score is HOW LONG you have had that card, your HISTORY of paying revolving debt, and your CREDIT-TO-DEBT RATIO. Your credit-to-debt ratio is how much avaliable credit you have compared to how much debt you have. Use your credit card for small purchases and try to pay the balance off every month. Most people carry a balance, so make sure you are paying, at least, the minimum payment due each month.


- Have an Emergency Fund. An emergency fund gives you room to live when life happens. An emergency fund stops the use of credit cards for emergencies. The emergency fund gives you room to breathe when something unexpected happens. A good rule is to start with a goal of $1,000 and work your way up to 6 months of BASIC expenses.

- Educate yourself. Learning the methods and tips of good financial habits is something most of us weren't taught growing up. There are too many personal finance blogs out there to use the excuse of not knowing better. There are too many people willing to help you learn the right things to do financially. You can only use the "I was never taught" excuse for so long before you have to teach yourself.

- Plan YOUR work! Work YOUR Plan! Sit down and develop a plan. Plan for things you want, for things you need, and for things you need to want. Have a plan A, B, C, even a plan Z if you need it.


- Check you credit report. You get one free report from each of the 3 companies once a year from the government at http://www.annualcreditreport.com/ . There are also other ways to keep an eye on your credit. Your bank might offer a service to monitor your credit, things like this usually come with a fee so keep that in mind.


These are small but important things you can do to make sure your credit is where you need it to be. You have a life to live, don't let your lack of financial knowledge keep you from living the life you want.

If you need assistance, contact us by email, Facebook, Twitter, Phone.


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