It never hurts to learn a new budgeting method or how to invest for retirement, but it’s just as important for your financial well-being to learn how to build and maintain good credit.
What better time to do so than financial literacy month?
It’s also the start of Money Smart Week, a campaign developed by the Federal Reserve Bank of Chicago in 2002 to help consumers better manage their finances. This year’s campaign runs April 5-12 and will give consumers in dozens of states access to educational resources and events.
So in the spirit of these initiatives and the importance of credit, the following five actions can help you specifically be “credit smart” this week and for weeks to come:
1. Check your credit report
Understanding your credit report and making sure it’s accurate is crucial for building and maintaining good credit. Reviewing your credit report will not only tell you your credit score but it will also give you an idea of what is negatively impacting your credit and what you can do to improve those areas. Regularly checking your report can also help you catch identity theft or fraud early.
The government requires that each of the three major credit bureaus (Equifax, Experian and TransUnion) provide citizens with a free annual credit report so staying on top of your credit file isn’t costly. If you have not yet requested any or all of your three free credit reports yet this year, visit annualcreditreport.com or call 877-322-8228.
2. Make sure all parking tickets are paid
Some cities are handing unpaid parking tickets over to collection agencies in order to supplement budget gaps. While this might mean good things for those municipalities, if you have an unpaid parking ticket (or several) and your city handles unpaid fines this way, it won’t be good for your credit.
New York, Chicago and suburbs of Washington, D.C., are using this tactic, and the number of other cities that are too continues to grow, according to LearnVest. Contact the U.S. Department of Revenue to find out if your municipality is also in that group.
3. Sign up for credit card bill auto pay
Payment history is the most important factor determining your FICO credit score, accounting for 35 percent of the total. In order to ensure you never miss a payment, see if you can enroll in an automatic monthly bill pay option through your checking account.
If you can, set the automatic payment amount for at least the minimum balance and you won’t have to worry about accidentally making a late payment or missing one completely ever again. This can be especially helpful if you are maintaining a few credit cards along with your regular monthly bills.
4. Leave unnecessary credit cards at home
If unused credit cards are burning a hole in your wallet and you want or need to keep your budget in line, leave the cards you don’t absolutely need at home. For example, instead of bringing all your store cards, your rewards card and your general-use Visa, pick one or two.
This doesn’t just apply to those who have numerous cards, either. If you are like me and only have two credit cards and a debit card, try leaving both credit cards at home. If you can’t swipe it you can’t spend it.
5. Revisit the details of your credit card’s reward program
Who doesn’t love discounts and freebies? Odds are if you hold a credit card with a rewards program it’s those goodies that made you sign up for the card in the first place. Make sure you are getting the most out of your card’s reward program by reviewing your reward balance and program terms.
Once you’ve refreshed your memory about how your program works, consider altering your purchasing habits to get the most rewards. For example, start filling up only at gas stations that give you cashback or book your next vacation using the airline and hotel that give you the most points and valued customer offers.
If practiced consistently, all these “credit smart” suggestions will continue to improve your credit over time. Strive to continue these good habits even after this week is over to help you get the most out of your financial resources.