Get Smart About Credit

If you find thinking about your finances stressful, you're in good company. More than 70 percent of Americans say finances are their biggest source of stress. 
Fortunately, getting credit smart doesn't have to be as hard or as scary as it sounds. Here are five easy ways to improve and maintain your credit. 
1. Know Your Credit Score
Do you know your credit score? You should. 
Why does your personal credit score matter so much? Put simply, it can open or close doors in every aspect of your financial life. 
Adults with strong credit scores:

• Are more likely to get approved for loans and lines of credit
• Have more freedom and flexibility when it comes to choosing where to live, what to drive, and how to invest
• Have more of a safety net when unexpected expenses arise
• Get better terms on lines of credit and loans, which can save them hundreds of thousands of dollars over a lifetime

Adults with low credit scores can spend their lives struggling to achieve their financial goals.

• Almost everything costs them more
• They may not be approved for much-needed lines of credit or important loans, such as mortgages
• Lack of access to good credit can drive them to risky or damaging financial and credit decisions 

How Do Find Out Your Score?
If you don't know your score, you're in luck. It isn't hard to find.
You can often find your score on your latest credit card statement or on paperwork relating to any loans you may have. Credit counselors working for non-profit or government agencies, such as HUD, can usually provide it as well. 
If you've recently completed an apartment rental application or other credit application, the lender or apartment company will likely have pulled your credit score and may be able to tell you. 
It is important to be aware that each credit reporting company may have a slightly different score for you. Different companies use their own calculations, which can lead to minor variations. Overall, though, your score should be similar from company to company. 
2. Know What Affects Your Credit Score (and What Doesn't)
The next step in getting smart about credit is understanding what affects your score (and therefore matters) and what doesn't. Credit companies base your score on five things. 

• How much you owe to all creditors in total
• How long your credit history is
• What types of credit you have
• How consistently you pay your debts on time
• How much new credit you have applied for

Of these things, how consistently you pay your debts on time carries the most weight. The total amount you owe compared to how much you earn and how much credit is available to you is the next most important factor. The third most important factor is the length of your credit history. 
What Does This Mean for You?
How can you use this information to improve your credit score? 
First, if you don't already have a credit history, start one right away! Apply for a credit card or a small personal loan, even if you don't need one. This will open a credit history for you and help you down the line. 
If you have teenagers at home, help them apply for and get a credit card as soon as it is safe and reasonable to do so. Even if they have a very low limit or barely use the card, having a line of credit open will help them build a strong credit history early in life. 
Second, look at your total debt-to-income and debt-to-available-credit ratios. If you have a lot of debt compared to your income or available credit, work out a plan to pay down your debt to a more favorable level. Talk to a credit counselor for help if you need it. 
Third, understand that the most important thing you can do to improve your score is to pay your bills on time. Evaluate your current status in that respect. 
Do you pay on time every time? Do you miss an occasional payment? Do you often pay late? 
If you struggle with paying on time, get help. Find an accountability buddy, set reminders on your phone, or set up auto-pay when possible. No matter what system you use, paying on time is worth any amount of effort. 
3. Clean up Your Credit History
Cleaning up your credit history is a quick and powerful way to improve your score. If you intend to submit a credit application for apartment rental or to apply for other credit, take time to clean up your score first. It might very well help you get better terms!
How does cleaning up your score work? 
Three national companies monitor and report on consumer credit scores nationwide. They are:

• Experian
• Equifax
• Transunion

Each company is required to provide every consumer with a copy of their credit report upon request once a year. Remember that each company works independently and may have different information on record than the others. It is important to check your report from each company every year. 
To clean up your credit history:

• Request a free copy of your report
• When it arrives, review it carefully
• Look for and note any information that is wrong or inaccurate, including dates, numbers, and account status
• Contact the company and request that they change your history to reflect the correct information 

This process doesn't take very long but eliminating old debts from your report can improve your score. Correcting dates can also improve your score if it makes your history look longer. 
Cleaning up your credit history can be particularly important if you:

• Used to be on a joint account with a parent, spouse, or child but are not anymore
• Paid off or closed out debt in the last year
• Recently opened a new line of credit
• Have a common name and have had debts erroneously accredited to you in the past

For credit-ninja status, check one report between January and April each year. Check another between May and August, and the last between September and December. This spreads out the burden and limits the amount of time you might go without knowing about errors on your credit history. 
4. Know Where Your Money Is Going
Just under one-third of Americans follow a personal or household budget. While it's true that no one enjoys budgeting, you can't live a credit smart life if you don't know where your money is going. At a minimum, every adult should:

• Periodically review their monthly and yearly expenses
• Understand what their average take-home pay is
• Know how much they spend per month on average
• Know what they have in savings and how much money they are putting in savings each month

Without this information, it is impossible to make smart money decisions. If getting a grip on those numbers seems overwhelming, then the next tip is for you!
5. Make Digital Tools Work for You
Getting a handle on your finances is important, but you don't have to tackle it alone. Modern money apps and other smart technology can help you:

• Track where your money is going
• See how much money you have across accounts at a glance
• Trick yourself into saving money
• Communicate with your partner or family about money
• Identify and reach financial goals, such as saving enough for an apartment security deposit
• Set up and follow a painless budget
• Teach your kids about money management in engaging ways

(If you're the type of person who prefers good old pen-and-paper solutions, trying turning money management into a game instead.)
Digital tools can take the stress out of money management. They can save time and give you a sense of control that you need to make real changes in your financial habits. You may need to experiment to find the right tools for your needs and lifestyle, but the payoff is worth investing the time and energy up front. 
Online Courses
Finally, consider taking free online courses about money management or following a few free blogs or youtube channels run by financial experts. These digital tools can help you better understand the larger financial world in which we all live and equip you to make money-savvy choices. 
Learn More About Being Credit Smart
Now that you have these credit smart living tips under your belt, continue your journey with our other great articles. Learn smart apartment rental tips and tricks that can help you save money and make the most of your credit on our blog.