Strategies to Employ to Regularly Check-In on Your Financial Health
Do you know your credit score? While it is a good indicator of your financial health, it is not the only factor to consider. Read on to learn a few simple strategies that can help you monitor your financial health and wealth.
Check your credit report regularly
Your credit report is the foundation for determining your credit score. Equifax, TransUnion, and Experian are the three largest reporting agencies.
These agencies rely on reported information in creating your credit report. Therefore, there is room for error and you must review this information for accuracy every year: A reporting error could lower your credit score and impact your ability to get a mortgage, buy a car, or even qualify for student loans.
What should you look for in your credit report?
Though your credit report does not contain your credit score, it is the foundation for determining this number. Therefore, make sure to verify everything regularly. From the basic information like your name(s) and married status, you should also carefully review the details of finances.
Check to make sure all creditor information is accurate, that outstanding balances are correct, and perhaps most importantly, that all accounts are in good standing. If you see any delinquent accounts or an account marked something other than “paying as agreed,” contact the creditor immediately to make payment arrangements.
See an error in your credit report?
Dispute it with the reporting agency. This will open an investigation and if confirmed an error, the mistake will be resolved which could boost your credit score.
Want to know what your credit score is?
Your credit report does not contain your credit score. To get your score, check out a free app like Credit Sesame or Credit Karma, or your credit card provider may give you access to your score as well.
Pay off debt and increase your assets
Once you have confirmed your credit report is correct, eliminating debt and building your wealth is key to improving your financial health. To get out of debt, stop using credit cards – but do not close out the accounts. Closing accounts can lower your credit score. Simply put the card in a drawer or somewhere you will not be tempted to use it and opt for cash instead. Alternatively, consider taking advantage of tools like a credit card balance transfer or some of the very best credit card consolidation options to lower your overall debt.
Devise a budget
Create a budget that favors paying off your debt. Any money not used for basic needs should go toward paying off debt.
Focus on building your emergency fund. This savings is an asset and will provide a cushion for you in hard times. The bigger your emergency fund, the more financial security you have.
Improving your financial health is the key to building wealth. By employing these simple strategies, you will be more aware of your finances and be able to set and attain financial goals.