What? A blog about credit? It’s true. I am no longer the die-hard “never ever ever ever ever use credit ever ever” person I once was. Partly due to reading Broke Millennial and partly due to just realizing that perfection is impossible and sometimes it really is okay to do what you can and do your best to work within the system we’re currently operating.
When it comes to handling your credit, it’s important to view it as a slow and steady process. Focusing on the context of maximizing the return on your credit score with small and safe steps can decrease your tendency of falling into a pool of debt.
Managing your credit successfully must come after an in-depth overview of your financial status. Gaining knowledge on how much you’re spending every month, building a budget that gives you an overview of your payment strategy, and determining what you need to buy and how much to save instead can help to establish a trend of confidence and uniformity surrounding your credit. With a focus on living life through simple routines and self-care, you should begin to manage your money through non-extensive, yet necessary steps to achieve a minimalist lifestyle.
Choosing the right credit card can impact the way you build and maintain a great credit score. With all of the credit card options out there, it can be quite confusing when comparing their offerings, and factoring which one is the best based off of your way of life. A credit card is more of a tool than people think, and it comes down to how often you use it, how much credit you’ve built up to this point, and making the pay-off process a priority. With that in mind, here are some easy steps for handling credit like a boss:
Open a Bank Account
Opening a bank account is the first step in building credit history. It’s imperative to generate a high enough credit score so that eventually, you are able to get approved for the card you choose to apply for. Through an account that benefits the growth of your savings and minimalistic approach to life, you’ll be better prepared for the responsibilities that come with using a credit card.
Here are some important questions to consider when choosing a bank account that is right for you:
- Which option is the most convenient? (Within walking/driving distance of your home and workplace, etc.)
- Can I trust this bank to keep my money secure?
- Are there a lot of additional fees that come along with regulating my account?
- Will this bank account benefit my current financial situation and help my build my credit effectively?
Pay Off Credit Early
Designating your credit card to specific payments (and choosing them strategically) instead of using the card whimsically for unnecessary purchases can contribute to bettering your credit score and make paying off your balance easier. Remember: this card is a tool, not “free money.” If you think of it as free money, stop, read Broke Millennial, and come back. (I know, Amazon, sigh.)
During the beginning stages of establishing credit, it’s important to follow the deadline to avoid late fees. The more late fees you have, the more it will hurt your credit score in the long run. Try paying off your balance early and in full, before you even receive your statement. As a minimalist, don’t be afraid to set notifications on your phone as a simple reminder to submit your payments every month. A good rule of thumb is to pay your bills as soon as you get paid, which will help you avoid only being able to make the minimum payment at the end of the month. This can limit your chances of falling into a financial bind.
Charge What You Can Afford
As an owner of a credit card, it’s imperative to choose wisely what you’re using it for. The more consistent you are with what you’re paying off, the less likely you are to fall behind on payments and max out its usage. When you first start making transactions with your credit card, choose to use it with payments you know you can afford, like gas or groceries. Other purchases, such as hotel expenses, plane tickets or car rentals may not be the smartest expenses to charge when you’re first learning how to manage your credit because you can quickly fall behind on payments if you overextend yourself. Again, think of handling credit as a steady process without sudden impulse purchases or misuse.
Take Advantage of Credit Card Perks
Depending on the credit card you have or choose, certain perks may come along with making transactions and building your credit. No annual fees, accumulating airline miles and flight upgrades, automatic payment benefits, or credit monitoring services are all advantages you could receive. There are also cards that give you cashback rewards if you qualify for them. But remember: These perks are a bonus for behavior you already have, not a reason to buy more stuff just to get more perks.
To obtain the credit card that is right for you, determine strong budgeting goals and analyze your spending habits. Learn as much as you can about what each credit has to offer and how it can help you, not work against you.
Caitlin Liz Fisher 