#JAKWellness12 Week 9: Building and Improving Credit

It feels like it has been FOREVER since we’e done a check-in and challenge. That one skipped week felt like an eternity. It’s our last week of challenges for our financial wellness theme and this week I want to talk about credit. I am (obviously) no expert, but I’ve done a ton of research on this topic and through conversations with different people in the financial industry have learned a lot. Having good credit is really important, we know this, but building credit and attaining a good credit score can be daunting. It wasn’t until we started looking to buy a house that we really got serious about our credit and making sure it was the best it could possibly be. The thing about credit is it’s not something you can just fix or create overnight. It takes time, but the good news is there are plenty of ways to get on the right track. Looking forward to hearing your progress from our last challenge about budgeting money.

This Week’s Challenge: Build/Improve Your Credit

The questions I got about credit ranged from how to build it if you don’t have any at all to how you can improve it if it’s not that great. Your credit has an affect on a lot of your financial wellness. It impacts how much you’ll pay for a car, how much you’ll pay for your home (buying or renting), interest rates on credit cards and loans, even getting utilities like electricity in your apartment or house. This week’s challenge is to not only get a better understanding of your current credit situation, but also to take the necessary steps to build and/or improve it.

Jess Ann Kirby talks about credit scores as a portion of financial wellness
Helpful Tips

-If you haven’t done so in the last few months, check your credit score. You can request a free copy of your credit report from each of three major credit reporting agencies once a year at AnnualCreditReport.com. Many credit cards now also offer your credit score on your monthly statement.

This is a helpful post about credit scores and the impact of your number range. No matter where you are, don’t fret, you can always improve your score.

-Identify the steps you need to take to improve your score. This post clearly lays out steps you can take to improve your score. Some quick fixes are paying down balances on credit cards (the goal is to have a good debt/credit ratio). Even if you’re paying off your balances every month, if you max out your card that amount may be reported to the credit bureau, so if you can, pre-pay any balances.

-Keep old credit open. Having a long history is great for your credit score, so if you’re looking to consolidate, don’t get rid of the oldest credit cards you have.

-If you’re looking to get your score up quickly, check out this post. Before we started applying for a mortgage, we paid off all of our debt (we had been saving for a solid year) and it helped both of our credit scores immensely. We then only used 2 cards on a regular basis and paid them off well before the due date to help our scores. It’s amazing how quickly you can get your score up doing that.

Good luck! Can’t wait to hear about your progress from last week. xx

16 Comments

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  1. Sam says:

    This is something I was just thinking about the other day. I have USAA and am able to check my credit at any point, however my problem is that it is just so much easier for me to use my debit card (with another bank) than my credit card to help build my credit. I have 2 banks since USAA doesn’t have a physical location, and I mostly use my other bank, so I’m always trying to figure out how I should keep balance between all my my accounts.

  2. Jill says:

    Really excited about this topic. My credit had been at a slow incline for awhile now. But student loan debt is really messing with me. Made some mistakes early on that I am paying for in my 30’s. Enjoyed all the financial topics this month! So helpful to have a space to talk about this stuff.

  3. Melissa says:

    Ooh! This is one financial thing I’m actually really good at! I always use my American Express for all purchases and then pay it off each month, and it’s worked really well to build my credit. For some reason, using that instead of my debit card makes me feel like my cash is more secure without that debit card number out there … even if it’s just in my head, it works for me! I also use Capital One’s Credit Wise app to monitor my credit, and I like it a lot–it’s free and sends me a quick email once in a while that lets me know everything is on track or if a change has been detected.

  4. katy says:

    I learned about credit the hard way – trying to finance a car (even with a great credit score) can be expensive when your credit history isn’t that long… knowing exactly what hits your credit is also important! I had forgotten about the fact that applying to apartments / moving each year can affect your score too! Those inquiries can last for years!

  5. I had never heard the tip about keeping the oldest credit cards, though the idea of a history does make sense. That’s a good one to know!

    Credit is always kind of frustrating to me because in our case, we didn’t have any debt at all and only paid with cash or our debit cards so we were never spending more than we had. To me that seems like the best proof of financial responsibility and credit “worthiness” and yet we had no proof of it because we “had no credit”. However, since we wanted to start saving for a house, we had to get a credit card. And the first one we applied for was rejected because of that fact that we had no credit haha! Now we have one and have been good about paying it off every month, but it still makes me nervous – I would much prefer to pay with my actual own money so there are no surprises!

  6. Amanda G says:

    I wish I would have learned about credit earlier in life! I had no idea how important it was to start building your credit at a young age. I always used my debit card because I didn’t like the idea of spending money I didn’t have, but I now use one credit card and pay it off every two weeks.

  7. Stacy says:

    I don’t think a lot about my credit score if I’m being honest. I just checked it again, and I’m happy with where it’s at. I actually closed my oldest credit card last year, as I’d paid it off and it had an annual fee & high interest rate. I was paying off other credit card debt, and in the end it was the best decision for me. Right now, building credit isn’t a priority for me, but rather paying off debt and saving money, so that’s where I’m focusing my efforts. I’m doing my best to track my spending, pay debt strategically and save as much as possible right now.

  8. Garkie Zhu says:

    I think it’s crazy how little we learn about building credit. I was very fortunate to have parents that struggled with the concept of credit when they first came to this country so they knew how beneficial it was to be able to make big purchases like buying your first car, home, or opening a businesses. They got me one when I was 16 and my mom was co-signed on the account and would make monthly payments with it so I started to build credit even before I drove. Then as a I got older I opened my on Checkings account and got my first CC of my own and only used it for things like gas and food- and made it a point to pay off the entire outstanding balance at every month. It wasn’t until I got a better job did I start putting personal expenses on my Cc- it’s very easy to just swipe your card and have the amount accumulate quickly and snowball if you don’t pay it off.

  9. Jennifer Webb says:

    Thanks for the great tips! I’ve been trying to improve my credit for the past 6 months. As I pay down my credit cards I am seeing more score jump up and it feels awesome!

  10. Christina says:

    Coincidentally, I just got an email from my credit card company telling me nothing had changed with my credit score this month and it linked to a full report. I had no idea that existed without a direct credit check, which can negatively affect you.

    As others have said above, it can be so confusing. I have friends who have paid off their student loans and their credit score actually went down as a result, which seems so counter intuitive. It’s a lot to unpack, but it’s nice to know where I stand at least.

  11. Katie Gill says:

    I met with my accountant yesterday, and it felt really good to feel like I have everything organized – I owe a lot of this to you and the weekly challenges! After setting up my 2018 spreadsheets the way you suggested, I realized how much I liked it and how it really made me think twice about where my money was going…I actually went back and did ALL of 2017 that way, it made my appointment yesterday so incredibly easy and even helped me find more deductions as a small business owner I would have most likely missed otherwise – so thanks Jess!! Budgeting is still something I am working on, I think I mentioned it last time but I opened a new accountant that I labeled “Unexpected Expenses and Gifts” I am putting $75 dollars a week in there, and working up to a minimum of $500 for those random car repairs, wedding gifts or bill. I already have almost $300 in there without much effort, and it feels good to know that if something unexpected comes up I won’t have to dip into savings. Overall I feel pretty good about my credit cards, I have one that I am still paying down, but with no interest for a year – so as long as I keep budgeting a monthly amount it will be gone by September. Feeling really good about my financial status for 2018, thanks to #JAKWellness & to these weekly check ins! XO Have a great week

  12. Erin says:

    Thanks for all of the helpful credit tips. My dad taught me pretty young that it’s important to build credit, so I’m lucky to have a good credit score and credit background. No loans or debt to pay back so I’m really fortunate in that regard! Just going to keep paying off my credit card each month and focus on saving, because that is definitely NOT my strong suit lol.

  13. Bitsy says:

    Looking forward to reading up on how to improve my credit. Credit is a tough one for me because I’ve never had the big events(student loans, buying a car) to build credit. I was recently watching an episode of Mozart in the Jungle where one of the characters is trying to get a loan but can’t because he doesn’t have credit. His logic is that its good he doesn’t have any debt…that’s how I think too.

    Last week I started a savings account! I’ve always been good at saving passively but am excited to start saving actively.

  14. Kayla says:

    I recently opened up a Delta American Express credit card because the amount of travel I have been doing lately has been insane. It has been a dream of mine to be able to travel around the world and being a travel nurse only helps me do this more. However, you have to be careful because that interest rate is crazy high! I have always been very strict on myself when it comes to spending money-even though my mom might disagree. I always, always pay off my credit card bills immediately. I only have two credit cards- one with a very low interest rate and then my Delta Amex for travel.

    My goal is by the age of 30- 4 more years from now- I will have my student loans paid off. The only debt I currently have. If I continue to be diligent about paying off my credit card bills and keeping my spending to a minimum I should be well on the track to success.

  15. I have really been working on this! Thanks for the tips, tricks and links!