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Wow, I cannot believe it’s already 2020. I feel like 2019 has just flown by! If your 2020 New Year Resolution includes any sort of financial or money goal, this is the post for you.
TBH, I think it’s great that so many people strive for good finances in a new year. But, the normal resolutions include saving money, spending less, and finding more discounts. We rarely hear about people’s credit scores being part of their financial goals. As someone who has learned a lot about credit scores in the past year (#adulting, am I right?!), I truly believe this could, and should be a part of your 2020 financial resolution.
If I had one wish for T20S readers in 2020, it would for them to have the knowledge, and the skills to take control of all aspects of their life. It sounds silly, but it’s empowering! There’s truly nothing better than feeling like a #bossbabe, modern woman who understands and has control of their finances.
From a money standpoint, I truly believe this comes from not only budgeting, understanding your finances, but also thinking about your credit score.
Read this next >> 5 Things I Did in My Twenties To Get an 800+ Credit Score
Why Are Credit Scores Important?
Your Credit Score is a numerical value that explains to lenders how likely you are to repay debt – basically, a three-digit number that defines your financial reputation.
Your Credit Score is important because if you ever want to buy a house, car, or something else that may require a loan, your credit score will be the indicator to the loaner how likely you are to repay. Basically, if you can have a great credit score, it may be easier to go forward on a house, car, or anything else you would need to buy in your adult life.
6 Ways to Improve & Have a Great Credit Score in The New Year
Learn the ins and outs of credit scores
Because credit scores can be a little more complicated than let’s say, a budget, it’s easy for people to stray away from learning about them. But, not learning about your credit score, and not diving in, can only hurt you later on in life. You don’t want to be ready to buy a house, let’s say in a few years, and all of a sudden realize you didn’t have the credit score to do so!
There’s a lot to learn when it comes to credit scores (check out a deep dive on it here). When I first started diving in, I felt like a lot of the terminology was pretty unclear.
Start reading up on what makes up a great credit score, from credit utilization ratio to understanding the consistency needed, to figuring out how errors can affect your report – there’s a lot to dive in to!
Understand where you are starting out
If you don’t know already, make sure you understand what your credit score is right now. You need to understand where you are starting out to know if, and how, you should improve. Credit scores will range from 350 – 850. Anything below 560 is considered a low credit score.
You can check your credit score at Experian, Trans Union, and Equifax. If you don’t know what your credit score is, check it right now! That’s an amazing place to start.
Realize why credit scores are important
Repairing a credit score is a long process, that takes a lot of patience. You have to truly be committed to making the life changes that made your credit score low in the first place in order to repair it. I truly believe it is possible, but it’s something you need to mentally get behind.
Some of the most important aspects of credit score (that we’ll dive into later into this post) is to pay your bills on time and to get rid of outstanding payments. Both of these changes could require a lifestyle change, which could take a lot of commitment!
Think about your financial goals
In order to get behind having a great credit score in the new year, it’s helpful to create a financial goal. Maybe you love a vision board (I sure do!) where you say that you want to be able to buy a house or a car in the future. You will know that you need a credit score in order to do this. You’ll be more motivated to want to repair, and raise, your credit score if you have this goal in mind.
Remember that credit score is a means to an end – a great credit score means financial freedom for your future self!
Read this next >> 5 Things You Need To Know About Your Credit Score In Your 20s
Pay bills on time
Paying your bills is one of the best ways to show lenders that you can consistently pay back debt. In turn, paying your bills will pay back your credit score. I cannot stress the importance of this enough! Find a way to live within your means and pay your bills – the dividends will be endless.
Get rid of outstanding payments
If you have outstanding balances on your credit cards, start working on paying these off! This highly impacts your credit score and is a great way to have a good credit score in 2020.
If you have existing outstanding balances on your credit cards, you must work on paying them off. Not only will payments build up as a result of interest rates, but this highly impacts your credit.
Know that paying your credit card balances on time is a crucial part of fixing your credit. You essentially are showing lenders that you are trusted financially. If I were you, I’d do two things in this step of fixing your credit. 1. Make sure you are paying all future bills on time and 2. Pay off all old payments.
Before you do anything else, you can focus on this aspect of your credit report. It will make a massive difference.
Lexington Law also will do a consultation to go over their credit repair services that will help mentor you on where to focus your spending.