Why Credit score matters?
As I began my journey into the business world, I had to live with incomparable challenges that a young adult faces. finances. I had already opened my first bank account at an early age but with a big zero in it. Thankfully, I secured a job and was able to buy all what a teenager wants to buy and bought my first iPhone. Even though I didn’t make a lot, I was very excited and put it on a three years plan. Just when I was about to end the first year, I dropped my phone on the ceramic floor of my kitchen and it shattered in pieces. I was devastated and even more so as I still had 2 years left in my contract and no phone.
Few years later, I was finally on track with my finances and was able to save enough me to consider buying my first property. And so I started to save money and booked for my first appointment with my bank specialist. Nervous and excited, I was sure of myself and was ready to begin the first steps of my new goal. I made my way the my bank specialist office and sat down with a great big smile on my face. As we start reviewing my project, looking at the downpayment I have saved up for and looking at my revenue, the bank specialist was not very impressed. The first thing he mentioned to me is that my credit score was probably too low. Unfortunately, my past have followed me. What I didn’t know is that I still owed 40$ from that same phone contract I had years ago. Yes. 40 $. And that made my credit score suffer instead of getting higher over time. And I didn’t even know it.
Credit score does matter as it is a way for the bank to evaluate the risk factor. Based on your history, they are able to predict the behaviour to ensure the loan is paid back on time. Here are few tricks I was given by this bank specialist and made my credit score what it is today;
1. Make a Budget
If you know where your money is going, you will control your money instead of it controlling you. Knowing what comes in and what comes out. No need for a complex excel sheet to begin. You can simply start with a piece of paper with two column. One for your income and the other for your expenses, in other words your basic needs. Once that is done, you will be able to see what you can actually save up. Decide how much you are willing to put on the side for your project. And here is a bonus trick for those who has a hard time saving up; open a new bank account which is separate to your regular accounts and create an automatic transfer set at every paycheque and hide the card so you’re not tempted to use it. Next time you check that account, you will be surprise on how much you actually were able to save.
2. Make sure you pay your credit card on time
As I explained before, a credit score is a way for the bank to insure you have the ability to repay your loan. Therefore, one thing they look at is your credit cards. The advice I was given is to always below 30% of my credit card limit. That way, ____
As the title mention, make sure you pay your credit card on time and this will help you immensely with your credit score.
3. Track your credit score
The last trick I have for you is pretty simple but important. Track your credit score. a lot of banks offers you the option to look over your credit score through their app. You can also do so on Equifax where you will also be able to verify the account you have opened/closed and make sure all the information is right. If I’ve known that before meeting with the bank, I could’ve fix the issue from the source and saved a lot of time and hassle.
