5 Basics for a Good Credit Score
Your credit score is incredibly important. It affects your ability to get a loan, a credit card or even a mobile phone. It can even affect your ability to rent office space. And let’s not forget how it affects your insurance premiums, and even the interest rate you pay on your mortgage.
Let’s face it, good credit makes your life easier. In this article, we’ll talk about why having good credit is important, how you can improve your credit score and how you can protect your credit score.
Here are five basics to having good credit:
Pay your bills on time.
It’s important to pay your bills on time because if you don’t, it can hurt your credit score. We know how this can impact getting what we need to succeed in life, so be sure to keep track — whether on a calendar or an app — and get your payments sent in on time.
Use credit cards responsibly.
There’s a reason credit cards are so powerful, and that’s because they’re easy to use. They’re easy to use in a way that gives you instant gratification and that makes it really easy to overspend and to buy things that you don’t need.
However, if you’re just starting out in business, credit cards can be a great way to build your credit. If you pay your credit card bills on time, you can earn rewards like cash back or airline miles.
Keep a budget and pay yourself first.
The best way to stay on top of your finances is to keep a budget. If you want to be financially successful, you’re going to have to plan out your expenses, which should include paying yourself first. According to a study by the National Bureau of Economic Research, employees who are paid first tend to save more.
The benefits of paying yourself first are huge, because it makes it so that you are able to live your life on your own terms. When you pay yourself first, you’re setting aside a portion of your income before you pay for anything else. This strategy has been a gamechanger for many businesses.
Keep your debt-to-credit ratio as low as possible.
Keeping your debt-to-credit ratio low is important because it allows you to use more of your income to build wealth instead of just paying down debt. If you have a high debt-to-credit ratio, you may be spending all of your money just paying off debt and not be able to build wealth.
To keep your debt-to-credit ratio low, aim to pay off more than the minimum on all of your credit cards and even on some installment loans. You could save yourself hundreds, if not thousands, each year.
Set up a budget and stick to it.
Establish a budget and then stick to it. If you want to make your business a success, then you have to be careful about how much you’re spending on it. Make sure that you set a budget for yourself and then stick to it.
Additionally, you should be revisiting this budget on a regular basis. Income and expenses can change so quickly, it’s a good idea to update your budget at least quarterly.
Maintaining a healthy credit score is important to your success. Use these tips to build trust between you and lenders. And if you need more help, call the Laurel Creek Business Solutions team at 650-743-9293.