Credit Does Not Grow On Trees

Just like money, credit does not grow on trees. I once had this notion that I should have the ability to acquire loans without my credit being under scrutiny. Who do I think I am? The reality is that just like money, credit is earned. Your credit is a reflection of how you manage your debt. If you can’t control your debt, why should organizations approve you for a loan?

The pandemic was a reality check for some and myself included. I didn’t take credit seriously, it made me research what lifestyle changes I needed to make to correct that. I made these changes to my lifestyle and saw a large credit increase in just 6 months. Here are 3 changes that you can make to grow your credit and maintain your credit.

As a disclaimer, I am not a credit expert (yet *wink wink). These are changes that I made based on what was on my credit report. Many variables stimulate credit; these were l simple lifestyle changes that improved my credit score.

1. Treat your credit cards like cash, not like an extra income

Your credit utilization should not go over 30% (this is all of your credit cards combined) or you may be seen as a risk when applying for new credit or a loan. If you can’t afford to make purchases with cash don’t put it on your credit card. Your credit utilization is reported to the credit bureaus a few days after the date that it’s due. A change in your credit utilization could have a negative effect on your score.

I had a few credit cards that were maxed out for purchases that were not necessities. I paid down my credit debt and made it second nature to pay them down before the due date to maintain my credit utilization. My credit score goal is the 800 credit score club. Im making it a habit to keep my utilization below 10%. Like my Dad told me growing up, dress for the job you want, not the one you are applying for. I am in the 800 credit score club in my mind and should change my lifestyle to reflect that.

2. Pay your bills on time

When you have a late payment on your bill, it has a negative effect on your payment history. Things come up, most companies understand that and are willing to work with you. If you can not make a payment on time call the company and ask for a payment arrangement. If you are a forgetful person put your bills on autopayment. I like to put them on a credit card because I never fail to pay those, and I would have paid cash for them anyway.

3. Create a budget, so that you do not overspend

Along with being able to manage your debt you need to be able to manage your spending. You use cash to pay off debt and if you can not manage your cash you cant manage your debt.

Get your bank statement for last month, and go over every line on that statement. See what you are spending your money on. Take your statement and write down your needs and your wants. You want to find alternatives for the wants so that can save you money. You don’t need hot coffee from bucks every day. Take a visit to your local grocery store to buy the Starbucks brand coffee you like to drink. You have made now made a 20 cent cup of coffee instead of the same $4 coffee you were once buying from Starbucks.

When I went over my statements I found that I was spending 40 dollars at Starbucks every week. Do you know what I could with an extra $160 dollars each month?

Let’s reflect

When you spend aimlessly, you spend money on things you could have saved for a rainy day. Im not saying don’t buy Starbucks but reward yourself with Starbucks once in a while instead of 7 times a week. Your credit will determine what type of loans you are eligible for and even where you live. When you budget and monitor your credit, you’re building for your future. I think your dream home is more important that that cup of coffee. Now plant that tree and water it consistently to maintain its health.