Financial Planning Month presents a fantastic opportunity for you to evaluate your financial situation before the holiday season. Understanding your finances is important no matter where you are in life. This year on October 20th, we observe “Get Smart About Credit Day”, which is puts the focus on knowing what it takes to have good credit and how to manage personal finances responsibly.

Here are some steps you can take to successfully build your credit and manage your finances:

  • Open a credit card account. If you don’t already have one, opening a credit card account or two can be beneficial. You can choose how much to charge each month and how much to repay. Since lenders view how you manage credit cards as a key indicator of how well you manage your finances and repay your debts, using a credit card to make a small purchase or two each month and then paying your balance in full can help improve your credit scores without taking on massive debt.
  • Make all your payments on time. Your payment history is the most important factor in your credit score, which can be impacted by just one late payment. Consider setting up automated bill payments to help make sure you never miss a due date.
  • Set up payment reminders on credit cards apps. Most major credit cards offer an app to manage your payments, check statements and balances, among other things.  You can set up email or text reminders that let you know when payments are due to avoid missing a due date.
  • Keep your credit card balances low. Your utilization ratio is the next most important factor after your payment history. Utilization is calculated by taking the total of your credit card balances divided by the total of your credit card limits. The lower your utilization ratio, the better for your credit scores.
  • Don’t charge more than you can afford to repay. Ideally, you should limit credit card purchases to only what you can afford to pay off each month. Paying your balance in full each month keeps you from accumulating revolving debt, which helps you avoid interest charges and shows lenders that you can manage debt wisely.
  • Don’t borrow more than you comfortably afford. When opening a home or auto loan, it is not always wise to borrow the full amount you are approved for. The more you borrow, the higher monthly payments will be, and only you know if you can really afford those payments comfortably. As a general rule, it’s always best to leave some wiggle room in your budget.
  • Think twice before you cosign or open a joint account. Many people don’t realize that when you cosign for a loan or open a joint credit account, you are equally responsible for the debt. Even if you are not the one who is making payments or charges on the account, any missed payments, high balances, or default will impact you as well as the other signer.

Having a financial plan can also benefit you in the case of an emergency. Read our blog on Emergency Funds here for some tips to get started.

Having a finger on the pulse of your finances can minimize surprises and help you in the long run.

Visit a personal banker at one of our branch offices to start the conversation on better managing your finances!