May 31st, 2012

Your Personal Finances Start with Your Credit Score

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personal finance

**Today’s guest post is contributed by Kristina.**

Some people think that their credit report is only important if they want to know their credit payment history and some people think that their credit score is only important if they want to know the numerical value that determines their credit worthiness, but this is not necessarily true. Your credit report and your credit score actually both contain a lot of useful information which can help people learn about their current financial situation as well as their personal financial habits.

There are several different aspects that can affect someone’s credit score both positively as well as negatively, these variables are all determined by your daily personal financial habits. If you make (at least) the minimum monthly payments on time each month and if you keep the outstanding credit balances low relative to the available credit balances, then you will significantly increase or maintain a strong credit score. However if you apply for credit products too often, if you continuously carry high balances on your credit cards, and if you make late payments onto your credit cards each month then you will watch your credit score quickly decline.

Ordering your credit report as well as your credit score are the first steps towards improving your personal finances. After examining your spending habits and past financial behaviour you can then make changes towards improving your personal financial situation; this may include revising your budget, setting up pre-authorized payments onto your monthly bills to make sure they are paid on time, as well as increasing your monthly savings. You can get your free credit score directly from Credit Karma and you can order your free credit report directly from Annual Credit Report.

3 Ways your credit report can help you learn about your personal finances:

View your spending and savings habits. If you regularly check your monthly credit card statements and if you regularly view your credit report you will see how you are spending your money and you will discover certain spending habits. You may realize that you are spending money in places that you don’t need too or maybe you are overspending on some living expenses that could otherwise be cut down or eliminated all together. Money that is not spent can be saved in an emergency savings fund or for retirement.

Learn from your mistakes. If you mismanage your money, make late payments, and maintain high balances on your credit cards it can definitely harm your credit score. You have to determine why you are missing payments or making late payments on your credit cards, what is the root of the problem? Maybe it’s because you are charging more purchases on your credit cards than you can afford to pay off, or maybe you are spending your monthly income instead of paying off your bills. If this is the case then you should definitely sit down and go over your personal budget to see which monthly expenses are necessary and which monthly expenses can be cut.

Keep your personal information up to date. Your credit report shows all of your current and past credit accounts including credit cards, personal loans, lines of credit, overdraft protection and mortgage loans. Reviewing your credit report regularly helps prevent identity theft and fraud because you can see how your personal information is being reported.

Kristina is a Financial Services Professional with over 12 years of experience working in the Banking Industry. She helps people invest their money wisely and plan for their retirement at DINKS Finance. Kristina enjoys helping people plan their personal budget, pay down their debts, and enjoy their financial lives.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

6 Comments

  1. And a great source for keeping tabs on your credit report for free is http://www.annualcreditreport.com Personally I pull my Transunion report in January, Experian in May, and Equifax in September. This lets me keep tabs on everything all year for free. Unfortunately it will cost you extra to get your actual scores.

    Ohio FHA Refinance at 11:28 am on May 31, 2012
  2. I pull my credit report once a year in May, just to make sure that all of my personal information is being reported correctly. Thanks for reading.

    Kristina at 3:13 pm on May 31, 2012

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