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3 Tips to Improving Your Financial Health

So your credit history isn’t so hot–now what? Sometimes you might feel like there is no road to recovery, but there is. Many Americans have at some point struggled with not having their finances in order. Divorce, risky investments, business ventures, reckless spending from youth, are all things that can affect one’s ability to open new lines of credit and acquire loans. It may feel like a well that you can’t seem to climb your way out of, but I can assure you there is always a way. Take it from folks who’ve been there–there’s a road to recovery with improving credit health. This won’t be something that will happen fast, it will take a while but there are some tried and true ways to increase your credit score and repair past credit history. Here are 3 quick tips to getting started on improving your financial health. 

Review your credit report

Make sure that nothing stands out as alarming on your credit report, and dispute any charges you feel don’t make sense. Remember your credit card is constantly vulnerable to theft so check the charges, and make sure there aren’t any mistakes about when you paid off balances. If there are, dispute them with your bank so you can clear them up. Routinely check your credit report moving forward to keep tabs on fraudulent activity and track your progress. There are a number of apps that can help you with that such as Credit Karma, or Experian and others. 

Budget yourself

Examine your current spending habits, then figure out where to cut, where to save, and practice only spending on things that are absolute essentials. Yes, I know that new pair of airpods looks very nice, but it’s 250 dollars, and you have other expenses that it could be put towards like food, savings, or home essentials! It’s typically best practice to not exceed 30% of your credit limit every month if you want to improve your FICO credit score. First, you want to narrow down how much you owe and when. Figure out where to save, then establish a timeline of when you want your debts to be paid off. Establish a cadence of paying debts and balances on time, and you will see incremental upticks in your credit score. The key is to NEVER forget a credit card payment. If it helps, set up autopay for your credit cards. It is always best to pay the full balance if you can. It’s also best if you pay off balances twice a month. 

Diversify the money you borrow

It might seem odd to borrow money when you are actively trying to improve your credit score and financial health but hear me out: if you “mix” the types of accounts you have, or the money you borrow, i.e. not just credit, but talking to a loan agency about mortgage, student loans, and you have an established way to pay these things off regularly, this can actually be very beneficial for your credit score. It’s all about proving to these institutions that you are reliable and that you can pay off your debts on time, and in full. Don’t take out a loan just for the sake of it, but make sure you are consistently paying off your loans. If you are in the market for something like a home or car, and you have saved up the funds, opt for taking out a loan because you’re in a position where you can pay it off confidently, and it would increase your credit score, therefore your ability to access future loans at a lower interest rate. 

There is no fast way to improve your credit score, it’s a long and committed process, but one that will prove fruitful in the end. 

 

 

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