"In addition to landing a job and finding a place to live, building your credit score is one of the most important things you can do to start traveling the path of financial success," says Michelle Fox, author of Building Credit Is One of the Most Important Things Adults Can Do. This is especially true when it comes to larger purchases such as a house or car. The higher your credit score, the more likely banks are to approve loans to you.
A credit score is a unique multilateral score that is determined by the consistent amount of repayments on the credit card itself. With this specific credit card, you can spend on anything, however, it will have a limit. That limit is the amount in which the credit card holds for maximum spending power. Michelle Fox notes that “Credit scores range from 300 to 850. A good score is 670 to 739, very good is 740 to 799, and 800 and up is considered excellent.” The goal is inevitably to maintain a credit score of around 780, this allows for banks, mortgage companies, and auto dealers to trust you and they know you are reliable for making those payments on time without delays. A good credit score shows financial honesty, meaning that when companies do audits on our credit reports they can see exactly what our payment history looks like. With a bad credit score, trying to buy larger items like a car and or house will be almost impossible because they can see our bad payment history being late consistently.
Building up your credit score is essential in the world we live in today; everything revolves around good credit. Learning what to spend and how much to spend is all the difference maker to adhering to sound financial responsibilities. Being financially responsible is understanding the debt game. When you are able to keep your debt low and stay net positive on the recurring bill payments. This all plays into healthy spending habits, which means spending a set amount of money that you can repay back in a timely manner. The easiest way to start is with small expenses like groceries, phone bills, streaming services bills, and internet bills. These necessary expenses that are paid with a credit card will exponentially grow your credit score.
Attaining a good credit score is as important as owning our driver’s license, it is in a sense a part of our financial identity. We must stay vigilant on our spending and our recurring payments so we can splurge on much bigger things that require an immense amount of more financial due diligence.
Here to help,
Your Financially Fit Team