Having a clean and solid credit file is not something you worry about every day – but it is so important to being able to live as you want that it’s smart to spend a little time taking a clear look at your financial picture.
Good credit gives you the power to get what you want while bad credit can keep you from enjoying life to the fullest.
If you want to rent a new apartment, get a mortgage for your first house, buy insurance, or trade in your clunker for a new car, then having good credit is a crucial factor. The time to make needed changes in your spending habits is before you apply for a loan and are turned down.
Having a Budget is Important
Do you have a budget? Is it a budget that you follow or just some numbers on a page? Your monthly budget should be a spending plan to ensure your monthly bills that must be paid! If you find you are borrowing from Peter to pay Paul every month, you need a budget that works.
Being in control of your money is great. It gives you freedom, not limits. You can take control of your credit and spending no matter how much or how little you earn.
If you are in control you don’t buy on impulse because you know how much you have to spend for extra purchases and the decision you make is based on knowledge and planning, not on a whim.
Make a budget that shows all of your expenses and then make a list of only those payments that are due each and every month. The total amount of that second list is what you need to set aside from your income each month without fail.
If you are one of those often stressed about a late payment, this simple budget will solve the problem within a month or two.
Cut Your Expenses
Look for ways to cut some of your expenses. Do you need to buy a $15 CD today or can you a better price for the CD online and wait a few days for shipment? Are you picking up food to go at high prices because you didn’t take time to grocery shop?
You may think it’s a waste of time to use coupons or to cut out Starbucks. Think about it. If you skip a special coffee two days a week you may save over $20 a month. Ignore small coupons and use those that are worth .50-$1.00 or more that you find in the Sunday paper.
Is buying the high priced brand name product really necessary all the time? If you add up the savings of a dollar here and two dollars there you’ll have enough money to make a larger purchase when you need to.
Get Your Credit Reports
Once you have your spending under control it’s time to get copies of your credit reports from the three major credit bureaus.
Those are TransUnion, Equifax and Experian. That report includes your personal information, your income and your all important credit history that reflect how you pay your bills.
Look at all three reports to find any errors they may contain as you can have incorrect information investigated and removed. Your credit worth is an evaluation of risk and the judgment of you is a three digit number.
Your goal is to have a number of 650 or higher. If that score is below 650 you may have problems with obtaining credit as the companies will treat you as high risk.
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Maintaining good credit is a process of spending responsibly and paying your bills when due. It takes effort to stick to a budget and pay attention to due dates but you will reap the rewards in the future.