Clever Credit Habits

Keep an eye on your Credit Score

Whether we like it or not, we all have a credit score. It gives lenders the information they need to determine whether or not they will give us a loan. A good credit score is important if you want to make a big purchase, like a house! Checking your credit score and reviewing your credit reports once a year is an excellent way to ensure everything is in order. You can obtain it from one of the three credit bureaus and see where you stand financially. If you want to obtain a free one from each of the credit bureaus go to www.annualcreditreport.com, the only government approved website. Remember, when you pull your own score it is a “soft credit check” and will not affect your credit score. Be careful not to have multiple “hard credit checks” too frequently (these are the ones that occur when you apply for credit, for example). This could lower your credit score by a few points; possibly affecting being approved for a loan!

Pay those bills!

Did you know that payment history accounts for 35% of your credit score? So it's REALLY important that we pay all our bills on time! I know, I know. You're thinking, “Obviously, I will pay my bills CASH,” and that is great! However, sometimes emergencies arise, or something happens, and we might forget and pay it late. Paying bills late will contribute to a declining credit score, so we want to make sure we avoid that.

Guaranty has a wonderful feature that enables you to pay your bills securely from your bank account whenever you need, so you don't ever have to miss a payment. This allows you to save time as well as enable you to make payments any time with automatic payments or by setting up reminders, as well as being able to track your bills at different locations. If this sounds like something you could benefit from, give it a look! (https://www.gnty.com/services/bill-pay/)

Credit cards... the good, the bad, the ugly...and the GREAT!

Okay, so we all probably have a credit card or two that we've taken out in our name. As most of us know, credit cards are great for building credit, keeping your bank accounts safe from fraud, handling unexpected expenses, and so much more. There are a lot of great things that can happen to your credit score by using a credit card properly. For example, paying off your balance in full helps build your credit, and if you have a low credit score, this is a great way to help improve it. While credit cards are great, they can also be dangerous if misused. What do I mean by that? You can use a card to purchase something without the money physically leaving your bank account. Say that you see something you really want, but you don't currently have the money for it; you can use a credit card to purchase that item and pay it off later when you do have the money. This can be extremely useful but also dangerous. Because at the end of the month, you now have to pay your credit card off where you've just purchased something you can't afford. So instead of paying off your credit card in full, you pay the minimum balance. This is TERRIBLE for your credit score because it shows the lenders that you will purchase something you can't afford and don't plan to pay it back.

Now while this is a problem in itself, you also face interest on the money that you haven't paid back. You will now have to pay back that item PLUS the interest rate your credit card company charges you. The item could have initially cost you $500, but with interest, you now owe the credit card company $650. This not causes you to lose money, but it also kills your credit score. So please please please, if you are using a credit card, do everything you can to pay off your balance in full each month.

The aim of national Get Smart About Credit day is to spread awareness and promote smart credit habits. Obtaining and then sustaining a healthy credit score is not something that will happen overnight. It takes years to build a solid credit foundation or to correct your credit score. If your score is a lot lower than you'd like, keep working at it! You will absolutely see improvements over time and they will be worth it. Thank y'all for learning with me and celebrating credit. Y'all stay patient and keep working on those smart credit habits!