We are all familiar with upgrades aren’t we? We upgrade our computers, our appliances and undergo bathroom upgrades. So how about a life upgrade? No this is not a Bruce Willis movie – even though “Surrogate” was awesome. We are talking about your wallet, and more specifically, being credit wise. Sound interesting? Read on.
In today’s post we will cover how updating your credit score is the start to an upgraded life.
#1. CASH FLOW
This is a big one and I chose it first because of the impact it can have on your life if used wisely. Do you live paycheck-to-paycheck? Would an extra $20 for gas change how your week ends? That’s how it feels to have no cash flow and most of us have experienced this at least a few times. Cash flow gives you that buffer you need to make or break your week.
Tip – use credit to pay for things you buy on a regular basis, that way your cash is freed up on things that arise unexpectedly. “credit cards are bad” they say. We are talking about when life happens! Using credit is a great way to have cash flow and is actually a result of being money wise, not a result of debt. So you don’t have good enough credit to get a credit card? Apply for a Secure Credit Card from Capital One. With $50 you get a $200 credit limit. Find ways to establish a credit line.
#2. SECURITY DEPOSITS & DOWN PAYMENTS
Our next suggestion is a continuation of #1. Stop spending a ridiculous amount of money on security deposits and down payments. Getting a cell phone contract or renting an apartment? With a poor credit score you’ll be paying cash upfront… on the other hand, with a good credit score, you’ll walk away with a phone and keys in your hand right after signing on the line. Buying your home or car? With a poor credit score you will be paying a very high down payment…and that is large stacks of cash you can use elsewhere. Security Deposits and Down Payments are your biggest cash flow killers.
#3. CREDIT LIMIT INCREASE
How can a credit limit increase help your credit score? It’s called debt to income ratio or credit utilized and it’s a very large part of your credit score. Learn more about the ingredients to your credit pie by Kate Jacobs. Getting a higher credit limit(that you don’t abuse because you are credit wise) gives you that buffer when you really need to use credit instead of cash. Also, doing this will keep your “debt to income radio” lower.
– example, apply for a store credit card or an overdraft line of credit with your bank. Again, you won’t necessarily use them, there are only there to give you an overall higher credit limit and by keeping your spending where it was before the extra credit limit, lends you a better “debt to income ratio” and reflects a better credit score.
That sums up today’s post. Do you feel more credit wise? Good!
One final tip – Take a fraction of the cash you are spending on security deposits and down payments and use it to repair your credit score. Find more ways to slowly update your scores, and of course don’t abuse the credit that you already have. Let’s be credit wise ladies and gentlemen.
If you are interested in updating your credit scores then you need to get started now. Give us a call.