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January 2, 2020
As we say good-bye to the last decade and hello to 2020, it’s even more important to focus on planning for tomorrow. One of the best New Year’s resolutions you can make for yourself is to start establishing good credit habits and set financial wellness goals for yourself that will help you get back on the path to a prosperous financial future.
If personal finances are a house, then having good credit is the foundation. Whether your plan is to purchase a new home or start your own small business, you’ll need a loan to get there, and you won’t be able to get one without good credit!
Like anything in life, responsible credit practices are not something anyone is naturally good at. You have to work toward developing habits that demonstrate sound money management strategy. Remember; it’s much easier to build a credit score than repair a damaged one.
Enough introduction: what can you do to avoid costly missteps as you start on your journey to building and maintaining good credit?
- If you are just beginning to establish your credit history, open a checking account with your local community bank and make a habit out of keeping track of your balance. New Tripoli Bank has a free checking account to get you started and money management tools in our online banking platform.
- Instead of cash, use debit and credit cards for convenience and safety. However, make sure you don’t overspend! Missed or late payments can be damaging to your credit and will end up hurting your credit score.
- Try to maintain a varied mix of credit types (such as a revolving line of credit or an installment loan). Utilizing different types of credit shows your ability to manage your finances and will boost your credit score.
- Three to six months prior to making a major purchase, you should take extra care to demonstrate financial stability. Loan officers will feel more comfortable lending to you if you aren't opening and closing accounts or moving large amounts of money around, and avoiding these practices can mitigate stress after a large purchase.
- Build an emergency fund equal to at least six months of living expenses. That way, if the unexpected happens, you will still be able to pay fixed expenses without falling behind.
- As you reach different stages of life, you should alter your credit focus. Early in life you can take out loans on larger purchases such as automobiles and real estate, which will help you build credit, but as you near retirement you will want to make sure these major loans are paid down.
- Monitor your credit regularly to correct any errors and quickly detect signs of potential identity theft. Order a copy of your annual credit report from annualcreditreport.com. You can also sign up for credit monitoring services that will help protect your credit.
If you’re concerned about your credit or want help achieving financial milestones, you should contact your local community bank who is always ready to assist. Maintaining good spending and saving habits early can help you focus on your financial goals and make it easier for you to navigate life’s unexpected twists and turns.