4 Tips to Follow When Building Your Credit

4 Tips to Follow When Building Your Credit (1) (1)

Your credit history has massive impact on your personal finances, as well as your entire life.  Individuals with poor credit, or no established credit at all, face many challenges when it pertains to milestones in life like purchasing a new vehicle or your first home.  Once you have established credit, it may be difficult to manage. It is important to remember, credit options may not make you dish out money immediately, but they do need to be paid back; this is where the difficulty may come in.  Nevertheless, credit can always be built back up.  

Here are 4 tips for building your credit.

Make Sure Your Credit Reports are Accurate

With the evolution of the internet, there are many ways for someone to look up their credit reports; some resources will provide one score, while others will go more in depth with a full credit report. There are three major credit bureaus that your credit report and score is based off of, Experian, Equifax, and TransUnion. It is important to make sure that when you are accessing these scores, they are accurate.  If you see something on your report that isn’t supposed to be there, or it is not accurate and negatively affecting your score, you can attempt to dispute it.

Confirm Areas That Need to be Improved

Once you analyze your reports from all three major credit bureaus, confirm what areas need to be improved.  Whether it is a credit card with a long term balance, or a loan that you’ve missed payments on. Make note of those areas, and tackle them strategically over a period of time.  It is always important to remember that the improvement of credit can happen, but does often take some time and patience.

Make Any Late Payments

If you notice late payments on your credit report, immediately take steps to bring them up-to-date.  Late payments can affect your interest rates, and build up penalty late fees that will push back any payment progress that you’ve been making.  Always keep in mind, if you can pay off an entire credit card balance, it is better to do so as soon as you can.

Make Payments In Full & On Time

In future credit purchases and transactions, make sure to make your payments on time, and if you are able, in full.  If you are unable to pay a transaction off in full, put the maximum amount you can afford toward your monthly payment; the quicker the balance comes down, the better.  To help make your payments on time, considering setting up auto-pay. Auto-pay is a great tool to ensure you don’t accumulate late fees due to a missing payment.

Personal Finance Tips for New Parents

John J Bowman Jr Accountant - Personal Finance

Raising a child is absurdly expensive. According to the latest federally-provided figures, a child can cost his or her parents an average of $233,610 over the course of eighteen years – and that isn’t even accounting for private or college tuition! Welcoming a child into the world is an exciting time for any parent, but it requires some practical thinking and hard financial conversations. Here, I overview a few strategies that every single expecting or current parent should implement to secure their own and their child’s financial future.

 

Create a New Budget

A new baby brings new expenses. The added financial cost posed by diapers, formula, and childcare can weigh down even a solidly made budget. Keep track of your expenses, and build a budget around the actual expenses you face, rather than those you projected pre-baby. Mind you, some of the costs you encounter might not be ones you anticipated; make sure that your health insurance will provide adequate coverage for your child in the case of emergencies. The last thing you want to discover on a trip to a needed doctor’s appointment is that your insurance doesn’t extend to your baby.

 

Bolster Your Emergency Fund

While every adult should have a sturdy emergency fund, these tucked-away savings are vital for new parents. After all, losing your job when the only person you have to worry about is yourself is one problem. Losing your job when you need to support a child is a problem of an entirely different magnitude. Make sure that you have enough in your emergency account to cover your family’s living expenses for three to six months in case of disaster, and ensure your financial security by reducing your credit card debt.  

 

Set Up a College Savings Account Now

It may seem odd to start saving for college when your child is still in preschool, but starting early is the only way to lessen the burden of tuition. Set up a 529 college savings account, and contribute however much you can afford every month. Your small inputs will add up over eighteen years; while it may not be able to cover the full cost of college, it should defray the overall burden and put your child in a position to graduate with a manageable amount of college loan debt.

 

Research Applicable Tax Credits

Knowledge is the key to financial security. Common tax credits include the child tax credit, which can give you a $1000 credit every year until your child turns seventeen, and the child and dependent-care credit, which provides qualifying filers the chance to claim up to $3000 for a single child under the age of 13. Do some research to find out which tax credits your child gives you eligibility for!

How to Stop Overpaying for the Basics

John J Bowman Jr Accountant - Paying for the Basics

Households across America are struggling to make ends meet. High housing costs plague many cities. In others, stagnant wages offer little prospect for relief. Many people try to work multiple jobs and reach for just a few more billable hours, but even the hardest workers only have so much time and energy. This leaves people feeling pinched every month, concerned that paying basic expenses will tips them over the edge and into debt.

 

Ben Franklin is famous for the adage, “A penny saved is a penny earned.” With budgets so tight, this adage is truer than ever. The best place to start saving is on the recurring expenses that you resign yourself to paying every month.

 

Rethink Cable

Do you really need cable? If you have an Internet connection, you can save a bundle by cutting the cord and opting for streaming services like Netflix, Roku, and Hulu. Speaking of electronics, are you overpaying for your cell phone? Unlimited service is available for as low as $35/month via certain retailers; if you are paying more than that, shop around for other options.

 

Be Sustainable

Energy bills can leave you broke, especially if you live hot or cold climates. Every degree you lower the thermostat in winter and raise it in summer can save you up to 3 percent on your bill. If no one’s home all day, why pay to keep the place at 75 degrees? A programmable thermostat can help you adjust temperatures according to your schedule. When you head to work, are buses and trains an option? Many Millennials find they can do without cars and the payments, insurance, and gas that keep many Americans broke.

 

Eat In

Dining out can serve up an unnecessary burden on your budget. Avoid high costs and calories by learning some quick recipes to prepare at home. Brown bagging your lunch saves you money and calories. Cook a big dish over the weekend and take the leftover to work. For groceries, forget convenience and shop where you get the best value. Warehouse clubs can save you money if you avoid the temptation to buy more than you use. Be especially careful with perishables. Also, get a coffee maker to make your brew at home. If you like gourmet coffee, you’ll need to invest in gourmet maker, but you’ll make up for the expense over time. If you are stopping by the pharmacy, make sure to get the generic equivalents for both prescription and over the counter medications.

 

Find Low-Cost Entertainment

Unless you’re a monk, you probably need some entertainment now and then. Big movie theatre chains offer discount plans and second-run movie houses provide big savings. There are also great deals for kids.

 

These strategies can save you hundreds every month. That can be enough to fund an emergency savings account or retirement plan. Establishing a cost-effective lifestyle takes planning and discipline, but it’s better than being broke.