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  Category: Articles » Finance » Credit » Article

Five General Financial Habits That Can Raise Your Credit Score

By Dulce Azogue

Nowadays more and more people are realizing the value of having a good credit score. Having one is important if they want to get loans at lower rates, get a job or even an apartment, among other things. Therefore, if they want to get a good credit score, they should pay their bills on time, correct any inaccurate information on their credit report, and not max out the available credit in their credit cards, to name a few. But little do they realize that their credit score is a snapshot of their overall financial habits. So if they really want to raise their credit score, you should not just focus on your bills and lines of credit but also on the way you handle your everyday finances and spending. Wise handling of expenses can therefore help you get out of debt and save you more money that can go to your bills. Here are five of the best ways you can do everyday that can help you be in control of your money.

1. Plan your budget carefully and stick to it.

Most financial experts will tell you if you want to manage your debt or be in good financial condition, then one of the first things you should do is create a budget and follow it. This is an overlooked step because many people think that it is boring, complicated, or only for those who can't afford to have everything. But planning a budget is really simple. You just have to write on paper your total take home pay each month and how much you should spend on your needs like food, utilities, transportation, bills, entertainment, hobbies, and so on. Then after writing down and estimating how much of your income should go to a certain expense, faithfully follow your budget. Some expenses might change, but at least you have a good estimation that lets you see if you meet all your financial responsibilities.

Many people think that budgeting is only for people who have less money and want to save more of it. This is not true. Everyone can plan budget regardless of his income. Even governments and corporations have their budgets, so you should, too.

2. Live within your means.

In conjunction with the above step, having a budget can help you live within your means because you are more aware now as to how much of your income must be going to every expense. If you don't have a budget and buy whatever your impulse tells you every time you see something in a store, you will be spending your hard-earned money for sure and have little money left for your debt payments and other important things.

3. Do not spend if you really do not need to.

We are in an environment where we are always told to buy, buy, buy. We always think of snatching up our hard-earned money from our pockets in every opportunity when we could save by doing it ourselves instead. When we want to read, for example, we think of buying a book instead of going to a library or borrowing it from a friend.

There are many other ways you can avoid spending more so you can save more money and pay off your debt.

a. Do it yourself. As I mentioned, doing it yourself can save you more money than you imagined. Making a home cooked meal instead of eating out or having a food delivery, washing your car or mowing your lawn instead of hiring someone else can help you spend less.

b. Buy used or discount items. You can save more money if you will buy used or discount branded items than paying at retail prices.

c. When you go outside, do not bring your credit cards and have a small amount of money with you instead. That way, you will avoid impulse buying which will lead to overspending.

4. Save a portion of your monthly income.

When you finally receive your take home pay, it is easy to spend it all on things you want to buy. But you should at least save a portion of it and leave it untouched. Saving just $25, or $200 a month and storing it in your bank account can prepare you in emergencies that can greatly need a large amount of money and can in turn hurt your credit score if you are not otherwise prepared. Saving 10% of your income is a good goal, which can easily accumulate every month.

5. Prepare an emergency plan.

There will be unexpected crisis such as loss of job, sickness, or lawsuits that can ruin your financial stability and all your credit-building efforts if you have not prepared in a long time. Having an emergency plan in hand can therefore prepare you for such disasters, and protect your credit score and all the efforts you have worked so hard on. In your emergency plan, you must include a list of assets you can liquidate, a list of resources you can use such as insurance, a lawyer you know who knows the financial facets of law, a severance package your employer is offering, and so on.

So you see, it's not enough that you pay your bills on time to raise your credit score if you do not live by healthy financial practices that can help you save you more money in the first place. Find more ways to manage your finances well and make you are in control of your money instead of your money controlling you.
About the Author
For a comprehensive guide on raising your credit scores and getting an excellent credit rating, visit

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