When you apply for new loans, credit cards, or housing, lenders and employers look at your credit score to determine how financially responsible you are. That’s not all: Some sensitive job positions can also require you to have a high credit score.
This makes it important that you hold an appealing credit score to your name. To help you with this essential goal, here are 10 money habits that will keep your credit score in the green and keep you from asking, “How can I enjoy life without jeopardizing my financial goals?”
1. Keep Track of Your Credit Report
By checking your credit report, you can specifically look for issues that you need to address in order to improve your credit score. Besides helping you unlock the secrets of ideal budgeting, this can also tell you which incorrectly reported missed or late payments you need to dispute in order to clean up your credit.
2. Never Miss a Payment
Continuing the talk about missed payments, you need to make sure that none of your loan and credit card payments are delayed. It’s because missed payments drastically drop your score. To steer clear of high interest rates or denied applications whenever you are applying for mortgages or credit cards, make sure to stay on time with your current payments.
3. Pay Your Bills on Time
Besides making timely payments for credit products, you also need to be consistent with your rent and utility bills. In addition to being in the good graces of your landlord and utility companies, you can also report these payments to credit bureaus to get a small but certain bump in your credit score.
4. Have a Good Handle on Your Spending
If you don’t have a good handle on your spending, you would not be able to improve your credit score with regular payments. This is where tools like a budget planner can help you keep tabs on your expenses and even cut them down in some cases. This gives you room to be up to date with your payments.
5. Don’t Buy Things You Don’t Need
When you have some credit on your name, it might seem like a good idea to spend that money on luxuries. But this can increase your credit utilization ratio that indicates how much of your approved credit you have spent across your credit cards. To improve your credit score, you should keep this ratio under 30%.
6. Save For Major Goals
Instead of spending big with credit cards, you can start saving money to make your major purchases. Besides putting your money in a high-yield savings account, you can also turn to an investment app that gives you a fair chance at growing your funds. This can help you become financially stable over time.
7. Set Up Auto Debit
To make sure that you remain on top of your loan payments, bill payments, and investment contributions, you can set up auto debit on your primary account. This helps you maintain accountability for your financial decisions. You can use this option as a starting step to following a guide to investing, saving, and managing your money.
8. Put Together an Emergency Fund
An emergency fund comprises 3-6 months of your household expenses. It can help you cover your medical bills in the event of an accident or your regular spending in case you lose your job. You can start building this fund by following a budget and saving money through solutions like a cashback app.
9. Don’t Apply For New Credit Too Often
Similar to how an employer may use a guide to FastBackgroundCheck services to check your credit before offering you a high profile position, lenders may look into your credit history when you apply for new loans. But this can drop your credit score. That’s why you should apply for credit only when you need it.
10. Maintain Your Oldest Account
Your oldest account increases the average age of your credit, which is a factor in calculating credit scores. If you close this account, the drop in the average age of your credit history can temporarily lower your credit score. In case you don’t have problems with your oldest credit account, try to maintain it for as long as possible.
When you make these habits a part of your life, you can see a positive difference in how you handle your money and how it improves your credit score. From there, it becomes easy for you to build a better financial future.