Your Credit in 2020
What a crazy year it's been!
There are a lot of myths, concerns and other factors concerning your credit score. In today's new, crazy world, you may wonder what to do with your credit score and why does it even matter?
No matter what your age, the sooner you start building your credit file, the better so let's get started!
First, you need to analyze what your goals are. Where do you want to be in the next one to five years financially? Are you younger, starting a family and may need a bigger house that you wish to buy and live in to raise those kids? Do you have older kids that will be moving out soon to go to college and need to potentially downsize to prepare for retirement? Are you retiring with goals in mind, pension or investment expendable income and limited responsibilities?
All of these matter when considering the "what" it is when you need to use your credit.
If you are in the middle of any of these options and don't need your credit for anything, you can simply keep doing what your doing and keep your bills on time and your credit card balances to a minimum while continuing your daily life. This will simply "fatten" your credit file for down the road with positive on time payments and lower credit card or debt ratios.
If you need to prepare for any big goals such as buying a new vehicle or house, you need to get a grasp on things long before you're ready!
Here's my advice for the next six months if you plan on moving up, downsizing or changing your lifestyle.
1) You should already be living within or below your means. What does this mean? It means, your bills shouldn't outlast your paychecks! Don't use credit cards excessively and pay balances down every month.
2) Always "freeze your fruit". If you have any extra expendable money, invest! Always invest in something you know that you are comfortable with the risk level. Real estate and precious metals for me. I'm not comfortable with the volatile stock market and it's an election year! Even if you can only do an extra hundred bucks per month, that will allow you some silver coins! Savings accounts never work because you will find an excuse. Better to have it semi-frozen than spent on a weekend in Vegas!
3) Pay down your credit cards as much as you can every month. Don't just make the minimum payments. ALWAYS, ALWAYS ALWAYS pay extra! That doesn't mean you stop using them, just don't keep accruing more debt!
4) If you plan on buying a new house or car, you need to get your debt utilization down as low as possible before qualifying. Banks look at how you manage debt so show them your best foot forward for as long as possible!
5) Lastly, try not to overextend yourself. Yes, water heaters go out, cars break down and life happens. Handle it the best you can if you don't have money put away for a rainy day and just don't be late! Always best to nip things in the bud BEFORE you get that unwanted credit pull for a new lease or mortgage.
Here's to 2020 going out as soon as possible, you keeping your good credit and to a successful 2021 with whatever your goals may be!