You may not think of credit score being tied to saving money, but if you think about some of the largest expenses that you have each month, what comes to mind? Your mortgage, car loan or lease, credit card payments, those all have interest rates or at least tied to your credit score. In order to free up extra money each month, if you can not only reduce unnecessary expenses, but those that you need to make each month, you can free up extra money to pay off debt and save for the future.
Check Credit Report
With the amount of fraud that occurs these days it’s important to review your credit score. Whether it’s someone stealing your card info at the gas pump, or a large hack from a retail store, and even credit bureaus are not safe these days, so you need to review for accuracy to ensure that all of your information is not only up to date, but correct. You can get a free copy of your credit report each year from the major bureaus, not to mention you can see your credit score each month on your online credit account each month to ensure it’s not trending in the wrong direction.
Make Regular On-Time Payments
Payment history is one of the largest factors in your credit score. If you are more than thirty days late on an account it will be reported to the credit bureaus, and even if it’s an accident, it can stay on your account for up to seven years, so that’s a mistake that you want to make sure you don’t make, basically ever. By creating a solid payment history, you can improve your credit score drastically over time, although it may not seem like it overnight.
The next largest piece to your credit score, just as important as payment history, is your amount of debt compared to the available credit. The closer you are to your debt ceiling, the more your score will be impacted, so it’s important to decrease your balance while increasing your available credit. If you are offered a credit line increase it’s a good idea to accept, while making sure you don’t go on a spending spree with all of the available money that you now have, otherwise your score, and you bank account will take a huge hit that could take years to come off if in debt. Though it can benefit to carry a revolving credit line that you payoff each month to avoid paying interest. For example, my wife has a victorias secret credit card as she loves the story, which helps to build her credit and accumulate rewards that she inevitably will use in the future.
Limit Credit Applications
Each time you have a lender pull your credit report you could be subject to an inquiry on your credit report that could stay on there for up to two years, so if you are submitting an application, you want to try and limit to those you are for sure going through with, otherwise you don’t want to have too many on there and jeopardize your score of give the impression that you are getting credit cards and are ready to go on spending spree, which would be fun, but not financially smart.