There are many people (*cough* Dave Ramsey *cough*) that will tell you that your credit score is unimportant, that credit is a trap, credit cards are the devil, blah, blah, blah…. I am the opposite. Being different is something I enjoy!
Let me start by saying this: if you are the type of person who doesn’t take life seriously, think debt doesn’t matter, doesn’t know how to budget, constantly spends more than you make, well, you probably SHOULD stay away from credit all together. If you are someone who likes to look ahead towards the future, someone who plans for life’s emergencies and happenings, and someone who looks for little ways to make/save a buck or two, you SHOULD focus on credit. Every year since I pay my card balance in full every month, I literally get paid to use my cards. My favorite card, for example, offers 5% cash back on EVERY purchase I make. Do you get $5 for every $100 cash that you spend?!? ABSOLUTELY not!
One of the easiest ways I have found to focus on and grow your credit score is by using Credit Karma, which is an absolutely free service. No hidden fees, whatsoever! Signing up is quick and easy, and once you sign up you can log in and check your credit score free-of-charge anytime. An even better feature is that your score updates once per week, not once per month, etc.. like some of the other free sites out there.
When I was younger, I’ll admit, I didn’t understand credit. Like many teenagers and 20-somethings I had a few cards that I maxed out and got behind on payments with. If only I knew then what I know now! The simple fact is that if you want to easily be able to fund some of life’s biggest purchases like a new car or a house, having a high credit score is important. Yes, there are other ways, such as manual underwriting, to get a mortgage. However, these involve much more hassle.
When I started reading and learning about credit I realized many of the things that Credit Karma helps you manage and track such as your Credit Card Utilization (which should always be as low as possible), your Payment History (should always be 100%, don’t miss or be late on a payment!!!! EVER!), your Derogatory Marks (focus on paying off old debt! AT LEAST debt less than 7 years old!), and other factors.
When you begin logging into Credit Karma weekly and tracking your scores, magic begins to happen. You see that the things you are doing have direct impact on your scores. You start to focus on old debt, you begin better using your available credit and not spending it on unimportant things. I, for example, went from someone who credit companies wouldn’t even consider for a new card to someone who gets easily 10+ card offers in the mail per week. Now I don’t accept them all, or even hardly any of them, but the feeling of receiving them is just something that makes you know you are on the right track!
A big factor in your credit score are your Credit Inquiries. These are a little mark you get on your report every time someone runs your credit, such as when you apply for a new loan, apply for a new card, apply for a mortgage, etc.. The less you have each year, the better. If you have tons of them each year it makes you look like you are out of control in managing your credit. I personally usually only like to apply for maybe one or two things per year, if that. It depends on what is going on in my life. Currently I only have four credit cards, one car loan, and no mortgage (right now anyway, that will be changing this year, more on that soon!).
Bottom line, Credit Karma is awesome. I could go on and on with little tips and tricks to help grow your score, and I WILL do just that in future blog posts, but if you sign up for Credit Karma you will be able to learn them all for yourself right there, again, with ZERO hidden fees. So what are you waiting for? Go give it a shot at the following address: http://creditkarma.com
THANK YOU for reading this blog and if you have any questions or comments feel free to leave them below, I promise I will reply!