Build good financial habits to build better credit.
Your financial habits and your credit go hand in hand. Your debts account for 30% of your credit score. So chances are, when you have your finances stabilized, your credit will be in the best position to be as optimal as possible.
Examples of good financial habits:
- Set a budget – This is your foundation. Setting a budget will provide a guide for what expenses you have and how much income you have available to work with.
- Monitor your spending – Make it a habit to check your spending on a weekly basis. This will allow you to see what expenses you have, and allow you to adjust your budget if needed. Additionally, this can help you capture any kind of fraudulent charges if your info is ever at risk. You can obtain free financial tracking services at websites such as mint.com.
- Track your debts – Be aware of the debts that you owe to avoid any surprise bills.
- Pay off higher interest debts – Paying off higher interest accounts first will pay off in the long run. This will get you out of the rat race faster when it comes to minimizing debts, especially in credit cards.
- Be proactive, don’t procrastinate – Avoid additional expenses and unnecessary late fees! Take advantage of any auto pay options to ensure payments are made on time.
- Plan your purchases – Have a big purchase in mind like a car or home? Set a goal for the date and money that you will need to make reaching this goal more affordable. For better terms or qualification, many of these purchases may require down payments.
- Eliminate bad spending habits – A little can go a long way. Bad spending habits will only set you back from your bigger goals. The daily cup of coffee from your favorite coffee shop can equal out to almost $2000 yearly that you could be saving towards your financial goals.
- Stop impulse expenses – Rely on the bare necessities.
- Build your savings – Spending less than you earn and sticking to your budget will allow you to have extra funds. Start setting these savings aside for your major purchases or for a cushion to fall on in case of emergencies.
- Invest in your future – Apply some of your savings into longer term investments. These investments can help you for future milestones such as college tuition for kids, or for retirement.
Following these 10 financial tips will ensure your finances and credit are in the best position for financing.
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*The information in this article has been provided strictly for educational purposes.