The Most Important Number To Know This Year

It’s become one of the most important metrics we can understand about ourselves. Not our BMI, or our cell phone number, but our credit score. That little rating can determine a whole lot about our lives, from the kind of home we can live in, to the rates we can access on borrowed money. So keeping it in good shape is absolutely essential. But if those numbers don’t read right? There are steps you can take towards reversing the damage.

Review Your Report

Many of us aren’t sure what the magic number that defines so much of our lives is. But checking your credit score couldn’t be simpler and it’s something you should do on a regular basis as circumstances change over time. You can order a free copy of your report online and review all of the accounts listed. First, make sure there aren't any errors in the record. And if there is any evidence of negative financial decisions, such as missed payments, check that they have come off before applying for any major credit, which should happen over time. If you have significant debt, consider speaking to some debt consolidation companies about your options for reducing your monthly payments into one sum.

Keep On Top of Paperwork

Allow some time for the admin work of going through your credit card statements, reports, insurance, tax documents, and medical bills. Get them organized in a file divided by type of paperwork and make sure any outdated paperwork is properly shredded so you’re not at risk of fraud. You can even use an app that scans documents and saves them as a PDF file for you, including important receipts.

Revisit Your Budget

If you don’t understand exactly what your monthly income and outgoings are, then it’s time for a serious budget review. Set aside a specific day each month to analyze what you’ve been spending versus what you have coming in, to build up a clear picture of your strengths and weaknesses. You may want to divide everything into categories, such as entertainment or clothing, to give a more accurate idea of where you could do with curbing your spending. You can either do this manually or use a budgeting app that connects to your accounts and monitors everything for you. Be honest with yourself about where you need to cut back and allocate an amount to spend to each category. Some people even like to use the ‘envelope system’ where you can withdraw the amount in cash and keep it in a designated envelope.

Make Some Good Credit

To make a positive impact on your score, work out where you can cut back in your budget to create funds to pay down some of your debt. Just paying off the interest will get you nowhere- you need to pay off chunks of the capital amount. Potential lenders like to see a history of regular payments on a previous debt, completed successfully. When you’ve paid of an account, make sure to phone up and close it properly. Not only will that help with your score, but it stops you from making the mistake of paying something off, only to run up more debt the same way.