7 Tips to Build and Maintain Good Credit
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Creating and maintaining a solid credit foundation is key to achieving financial wellness and success. We have teamed up with the Independent Community Bankers of America (ICBA) to offer insights empowering you to establish, grow, and maintain strong credit.
“Good credit is a blueprint for financial success, so it’s essential to create a track record that demonstrates sound money management principles as you plan your financial future,” said Shayla Sattler, Loan Officer at Friendship State Bank’s Batesville branch.
Your community banker can work with you to create a budget that reflects your short- and long-term financial goals so you can avoid financial setbacks and stay on the path to financial independence.
These tips can help you build and sustain good credit.
1. Open a checking account and keep careful track of your balance. Your checking account and balance do not directly impact your credit score. A checking account in good standing does help you build a positive relationship with a financial institution who can then help you build your credit. It also helps you appropriately track income and expenses enabling you live within your means. This provides you the opportunity to build credit without creating unnecessary debt that can negatively impact your credit score.
2. Use debit and credit cards for convenience and safety. Be careful not to overspend and avoid missed or late payments, which can damage your credit and hurt your credit score.
3. Develop a good mix of credit (such as a revolving credit line and an installment loan) to boost your credit score and demonstrate that you can manage different types of credit. Ask your loan officer about Friendship's Credit Building Loan.
4. Show stability in the three to six months before a major purchase. Avoid opening or closing accounts or moving large amounts of money around.
5. Build an emergency fund equal to at least six months of living expenses. Establish a financial cushion to help absorb unexpected expenses and avoid penalties and fees for missed or late payments. Open a separate savings account specifically for this purpose.
6. Alter your credit focus as you approach different life stages. While Gen Z might be saving for a down payment, Gen Xers or baby boomers may be paying down debt to plan for retirement, respectively.
7. Monitor your credit regularly so you can correct any errors and detect potential signs of identity theft. Order a free copy of your credit report annually from www.annualcreditreport.com.
“By establishing good spending and saving habits early you’ll be able to make your money work for you and speed up your recovery from temporary financial roadblocks,” ICBA President and CEO Rebeca Romero Rainey said.
“Reach out to your local community banker who can offer sound financial advice to help you navigate pivotal financial milestones and plan for your future.”
Reaching out to your local community banker for sound financial advice is a crucial step. Their expertise can guide you through financial milestones, ensuring you are well-prepared for the future. Following these tips and building and maintaining good credit habits can unlock the doors to a secure and prosperous financial life.