Improve your Credit Score AND Keep Money in your Jeans!

Often in my travels I run across some of the most interesting people.  I am very passionate about teaching/learning about personal credit scores, and knowing about good money management tips.  I’d like to share a few tips I have picked up along the way from just every day people who “get it”!

money in jeans

  1. Don’t go over the credit limit on your credit card.  Try to keep your balance well below the limit.  The higher your balance, the more impact it has on your credit score.  My personal rule of thumb is to never borrow more than ½ of the available credit on your credit cards.  This shows good financial stewardship in handling debt.
  2. Keep credit card balances low.  If you need to use them, pay them off right away.  Consider the card a convenience, not as available money to be spent.  After a day of shopping, go online and pay that sum off so the balance is always low!
  3. Pay down your credit cards.  Paying off your installment loans (mortgage, auto, student, etc.) can help your credit score, but typically not as dramatically as paying down – or paying off – revolving accounts such as credit cards.
  4. Don’t close unused credit cards.  If you have a low-interest card you do not use, keep it open and use it periodically.  Have a zero-balance credit card actually helps to improve a low credit score.
  5. Keep your income taxes current, by filing every single year.  You may owe money to the Government, but you can’t borrow money unless those taxes are at least filed!
  6. Never buy “toys” on credit.  Often we feel we deserve that more expensive car, the boat at the lake, the Recreational Vehicle, the snowmobile for seasonal use.  If you really feel you deserve them, save the money to buy them!  They quickly depreciate and are worth far less than you paid for them, so paying interest on a toy makes no sense at all.
  7. Pay cash for a car.  You will never get rich if you have a car payment.  Keep that $450/month and pay down your mortgage faster or invest it into an asset.  I personally have a “car account” where I put a pretend monthly car payment.  By saving the payment in advance, I can pay cash for my next car!
  8. paid in fullAlways pay your Household bills on time OR before they are due!  I personally open my mail over the garbage can, opening the bills, throwing out the junk mail on the spot.  I take my bills to my computer and pay them online right then and there.  Paying them on time may not improve your credit score, but it WILL negatively affect your score if you are late!
  9. Always pay the balance of a bill, plus just a little bit more.  If the phone bill is $54.25, then pay $55.
  10. Pay your mortgage weekly, or bi-weekly.  You save years on paying down your house just by making more frequent, smaller payments.
  11. Round up your mortgage payment.  If your mortgage payment is $750 every two weeks, talk to your lender and raise the payments to an even $800.  Every payment you make puts an additional $50 right back into your pocket!
  12. Pay down as much as you can on your mortgage during the first five years.  The first five years over the course of the mortgage is where the most interest is paid.  If you take your income tax refund, use your Christmas bonus or set extra money aside, you can pay down as much as 15% of the mortgage each year without penalty.
  13. When renewing your mortgage after the first term is over, keep the payments exactly where they have been for that last 5 years.  You are used to living with that payment, and you will be applying much more money towards the principle by doing so.
  14. Never co-sign a loan for a friend.  It drastically affects your lending ability as you are technically responsible for that debt, even though it belongs to the friend.
  15. Your Emergency fund.  Always try to have a minimum of 6 months wages saved in the bank.  It’s not there to spend, but rather to be there in case of an emergency, such as the loss of a job.
  16. Try living on cash for a whole month.  It’s amazing how we spend money through debit and credit cards without giving the real value of cold hard cash much thought.
  17. Review your credit report annually.  Review it carefully for errors and signs of identity theft. Click on the following links:

equifaxtransunion

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