Don’t focus on your credit. Focus on your finances in general.
The perspective in this piece is from my personal experience.
A high credit score has been beneficial when we purchased our two homes, rented for a year, purchased our vehicles from dealers, and refinanced our home. The process was easy in all these events. The first home was in my name only and it was an easy process. So, although I don’t like that some people get into debt because they associate good credit with carrying debt, it is beneficial.
You don’t need to be in debt to have good credit.
These are the habits I live by that have always had a positive impact on my credit score.
Pay my bills on time
Have at least one credit card always open
Do not close credit cards often
Do not open credit cards often
Keep balances low (less than 50% of credit allowed) and pay them off in full each month
Always have enough money in the bank for expenses to avoid overdraft fees
Do not co-sign for anyone or let anyone cosign for me
Do not lend money. If I have it you can have it.
The one thing that can ruin your credit fast is going into Collections and Bankruptcy. This happens when people let themselves go in terms of money. Spending more than you earn. Not paying bills and more.
Sometimes life happens and the people that you are involved with do not have your best interests in mind.
That happens often. The best thing to do is deal with the situation head-on. The worst thing to do is ignore it. Collectors will never go away. Bankruptcy stays on your credit report for at least 7 years maximum of ten.
Look at all possible solutions before deciding to declare bankruptcy. Many companies are willing to work with you. You just have to take initiative and make the phone calls.
With collectors, you can also negotiate. Tell them how much you have and see if they will take your payment and erase your bill.
There is always a solution.
The best way to approach life in any scenario is through prevention.
When it comes to finances the best method of preventing a bad financial situation is to follow a budget. Have an emergency fund in a high-yield savings account. Have sinking funds for irregular yearly expenses also housed in a high-yield savings account. Invest consistently. Having these four things in place are sure methods of a good credit score. They will prevent you from getting into bad debt and ever having to deal with collectors.
Don’t stress about your credit score. Focus on getting good with money.