So you’ve been riding the credit rollercoaster most your life and have finally hit a good groove — congratulations! This is no small feat. Credit can be a confusing journey that we’re all trying to navigate. With no proper crash course preparing us for the world of credit, a lot of missteps can happen in our young adult life. I know this firsthand. I had no idea how to manage my credit, how it impacted my future plans, or why it even mattered. Repeatedly being in this state of confusion set me up for a long road of digging myself out of debt and working to revive my credit score. Which turned out more than okay, because once I cracked the code I felt called to help others do the same. All my experiences led to starting my business and being here with you, writing this today!
If you’ve been on a similar journey as me, now approaching blue waters and eager to maintain your new credit status, this article is for you! We’re going to look at the 5 steps for securing your credit score and ensuring you stay on a positive trajectory.
Step 1: Understand Your Credit
If you’ve been able to escape your poor credit habits, my guess is that you’ve learned a lot about this already! But it never hurts to continue immersing yourself in credit knowledge to stay ahead of trends and changes. Since credit affects your ability to secure loans, buy a home, and lock in the best rates on premiums, it’s important to maintain.
Additionally, stay clear of these common myths that can improve your credit:
- False: Checking your credit will negatively impact your score. Checking your reports regularly on sites like FICO will not negatively impact your score. This is called a soft inquiry and is actually a great habit to adopt to stay on top of your reports, monitor progress, and resolve discrepancies.
- False: You should close old credit accounts. Keeping your accounts open will actually be more fruitful in the long run. When it comes to the credit game, longevity is key. It’s your ability to properly manage your accounts that will have a larger impact.
Step 2: Build Healthy Foundations
When in doubt, get back to basics! The key factors that will influence your credit score are: payment history, credit utilization, credit history, types of credit, and new credit.
To ensure you keep these boxes checked, you’ll want to:
- Make consistent, timely payments
- Keep your credit utilization below 10%
- Open a secured credit card or become an authorized user to begin building your history
- Regularly monitor your credit reports
Step 3: Resolve Credit Issues
I highly suggest reviewing your credit reports on a regular basis to address and dispute errors as soon as possible. Small mistakes can add up to big hits to your overall credit health, so it’s better to catch them early!
If you find yourself stuck in a cycle of late payments, pick up the phone and explain your situation to creditors, they may be able to offer alternative options or make more reasonable arrangements to accommodate your situation. You don’t know until you ask! Once your current credit issues are cleared up, download credit monitoring and budgeting apps to hold yourself accountable and continue to make progress.
Step 4: Leverage Credit as an Empowerment Tool
When you effectively manage your credit, you will have access to lower interest rates on credit cards and loans. As a result, you’ll save much more money over time that can then be allotted into other investments like securing a mortgage, purchasing a reliable car, and funding higher-level education opportunities. All of these investments can greatly improve your quality of life and also prove the significance of placing priority on long-term dreams versus short-term desires.
Step 5: Protect Your Financial Future
The best way to protect your financial future (and all the amazing credit growth you’ve made!) is to implement strong protection measures and credit habits.
Using unique passwords on your accounts, as well as updating them often, is a great way to prevent cyber hacking. I always recommend utilizing a quality ID theft protection service too so you can be in the know about any fraud or suspicious activity happening on your accounts.
Last but not least, automate your payments whenever you can to ensure you’re never falling behind or overlooking bills.
For more credit tips, be sure to follow me on Instagram @creditjeanne where I share all my latest courses, resources, and digital programs! If you want more customized support on your credit journey, you can check out my coaching programs here on my website.
Here’s to your continued credit success!