New Year / Fresh Start

There is perhaps no better time than the start of a new year to get a fresh start on your finances!  From your credit score to your credit cards to your retirement plan, now is the time to sit down, take stock of where you are, and make a plan to get to where you want to be by the end of 2021.
Not sure what your credit score is?  If you are not sure what your credit score is, then you know exactly where to start, don’t you?  You can get your credit score, and in most cases, your credit report for free online in any one of a dozen or more places.  From your bank to your credit cards, nearly every financial institution is offering free access these day.
Once you have that information in hand, sit down and review it completely.  Are all of the accounts listed on the report yours?  What is your credit score?  What can you do to improve your score?  Make a list. Then, move on to the next step.
Take a look at your credit cards.  Are the balances too high?  Experts recommend that you keep the balances on your credit cards below 33% in order to maintain your credit score.  If your credit card balances are above this threshold, paying them down should be a top priority.  Once you’ve looked at your balances, then it’s time to look at your interest rates.  Are you paying too much interest each month?  Perhaps your credit has improved over the past year, and you’ve gone from bad credit to fair credit, or fair to good.  If that’s the case, there may be better options than your current credit card providers, enabling you to save money on interest.  You may even qualify for a balance transfer card with a 0% introductory rate.  But you will never know unless you compare those credit cards to others that are out there.

Finally, take a look at your budget.  Where can you cut expenses?  Where can you save money?  How much more could you put into savings each week or month?  Even though 2020 was a really difficult year for all of us, getting a fresh start in 2021 may be easier than you think.  You just have to start somewhere.  Are you ready for a fresh start?

Best Ways To Improve Your Credit Score

When you look at improving your credit score, you have to look at the big picture.  If you’ve had a bankruptcy, it can stay on your credit report for 10 years, even though your credit history typically only covers the past seven years.

While there are plenty of law firms and companies out there that claim to be able to repair your credit report in an instant, many of them are scams, and can actually hurt your credit.  Simply put, the best way to clean up your credit report is to work on it yourself.  There is no “magic” fix – it takes time and effort, but in the end, it’s worth it.

Here are a few simple steps to get you started, cut remember, this is not an easy, quick fix.  It’s more of a starting point to put yourself on the road to managing your credit successfully.

Step 1. Make All of Your Payments On Time & In Full

The best possible way to offset your bad credit, and the best and first step toward repairing your credit, is making all of your payments on time, every time, and to pay them in full every month. Not only will this first step keep you from falling into the vicious cycle of owing interest and penalties, it will also help you climb back out of debt.

Step 2. Reduce Your Debt

Look for ways to reduce your debt, whether it’s just paying things off slowly, enrolling in a debt counseling program, or joining a payment plan with creditors to whom you are the most in debt. Don’t allow your debt to continue climbing.  Instead, actively take steps to clear your debt, and you’ll be home free sooner than you think.

Step 3. Understand Your Limits

This is the third most important step to take throughout your financial life. If a credit card, or bill sounds too high for you, or out of your league, don’t do it!  Your two best friends here are your basic math skills and your instincts. If you foresee a problem in the future, there’s a good chance there will be. Only purchase things you can afford, –it sounds simple, but it’s harder than most people think.

Step 4. Periodically monitor your credit report

Negative information about late or missed payments can lower your overall credit score. Monitor your credit report for incorrect information and dispute it when necessary.

3 Things You May Not Know About Your Credit

How much do you know about your credit score?  If you’re like many people, you know you have a credit score, and you may even know what it is, but that’s about all you know!  Even worse, many people have no idea WHY your credit score is even important in the first place.

If you’re not sure why you need to pay attention to your credit report and your credit scores, then you definitely need to start working on it.  Because your credit score is more than just your financial history… in many instances, your credit score can actually change the course of your life!  The question is, is your credit score changing your life for the better or for the worse?

Here are three things you need to understand about your credit score:

  1. Bad credit is expensive!   Your credit score can cost you hundreds of thousands of dollars in extra fees when it’s less than excellent.  There’s an old saying, “Buy with cash, pay once; buy with credit, pay three times.”  Sadly, it’s the truth, as it refers to interest, or the cost of borrowing money.  Not to mention the many other potential costs to bad credit, most of which lead to hundreds and even thousands of dollars spent on higher premiums for your auto and home insurance!
  2. Background checks aren’t all that potential employers pull!  Your credit score can affect your ability to get a job.  That’s right: your estimated ability to repay borrowed money (i.e., debt) also can be used to assess your suitability certain kinds of careers.   Although legislation has been introduced to limit the access of prospective employers to your credit score, these are just limitations, not universal exclusions – and I promise you, many employers these days do check your credit score.
  3. Knowledge is power!  Your credit score is a big indicator of your financial health and, as much as you’d like to, ignoring a low score won’t make it go away.  Instead, it’s time to be proactive and start working to raise or restore your credit score. You just have to take the first step and then put your mind to it.

Remember, your credit score is somebody else’s business, and not just your own.  Your credit score is big business these days.  Not only is your score at the mercy of three different privately owned credit bureaus, whose entire business is rating you and your creditworthiness, but they actually make millions of dollars every year doing it!

These “big three” national credit bureaus, Experian, Equifax, and TransUnion, not only track your score, they CREATE your credit score. And this credit – or FICO – score that they assign you ranges anywhere from 300 on the low side to a perfect 850 on the high side.  Which side do you want to be on?