[Y]ou may wonder how your budget decisions can impact your credit score, especially since your bank information is not included in your credit report. The fact is that one decision often affects another one. In the case of your credit, if you make mistakes with your budget, the first place you are going to pull money is from your credit cards. The first bill that often goes without being paid is the credit card bill. To avoid the repercussions that come from these decisions, you have to avoid making mistakes with your budget.
1. Not Having a Budget
The first detriment to your credit rating is not having a budget at all. It not only tells you where your money is going, but ensures that you have enough to pay all of your bills on time. There are a lot of places you can go to learn how to create a budget. In fact, many online resources even help you with the task.
2. Having a Budget That is Too Rigid
If you have a budget but it is not realistic, you are no better off than not having one at all. You must be allow room for unplanned expenses as well as a few “fun expenses” along the way. A budget that doesn’t have room for your morning coffee or Friday night dinners is less likely to be successful. You may have to make some compromises such as pizza instead of a five-star restaurant, but it is important to be practical.
3. No Emergency Fund
You are setting yourself up for failure if you don’t have an emergency fund. When something unexpected comes up, you have to pull from your budget if you don’t have a savings account. Set small goals to begin with like saving $100, then $500, and then $1000.
Avoiding these mistakes helps your credit in two ways. First, you avoid being late on your payments because you have the money to pay your bills. Second, you don’t have to borrow from your available credit limit to pay for something unexpected. Since credit utilization impacts your credit score, it is also important. Understand budgeting and you will be on your way to having good credit and all that it brings.
[I]f you have a goal to improve your credit score for the new year, you need to set up steps to help you achieve this goal. For many, they read all kinds of information about how to get a good credit score, and it can be overwhelming. Sometimes, it can sound so easy but not […]
[T]here are three major credit reporting agencies: Experian, Equifax and TransUnion. All of them provide a credit report which lists your personal information and credit accounts. You can get one report for free each year or purchase extra reports through the agency sites. Many people just get one credit report, but you really should get […]
[A]s you get credit cards, you will notice they give you a credit limit. This is the maximum amount you can spend on the card without paying some of it off first. Credit card companies often increase your credit limit as you prove responsible handling the amount you have. You may wonder if more credit […]
[I]f you have bad credit, it can be difficult to qualify for a car loan. However, it’s not impossible. Before you go out and apply for money to purchase a vehicle, there are some things you should know. Check Your Credit Before you fill out any applications for car loans, you need to take a […]
[M]any people hear that they have bad credit, which means they haven’t always been responsible with their credit accounts. However, it is another situation entirely when a person is told they have no credit. You may wonder how that’s possible and what it really means for your future. No Credit Doesn’t Mean Never Any Credit […]
[T]ransUnion is one of the three credit bureaus which stores information about consumers and their credit history. It provides this information to creditors and to consumers. TransUnion was founded in 1968, and it now has more than 200 offices through the US and the world. How TransUnion is Different TransUnion is similar to the other […]
[E]quifax is one of the three major credit reporting agencies which provides information used on your credit report. It has a credit score which will impact your ability to get approved for new credit. All of these agencies aren’t the same, so here is some information you should know about Equifax. Equifax is headquartered out […]