Are you in good financial shape?  Or are you ignoring the signs that you are headed for financial trouble?   To keep yourself out of financial trouble you should make yourself aware of financial habits that will set you up for trouble.

The 2 financial habits that get people in financial trouble the most are ignoring their credit scores and over spending.  This article will address both of those issues and tell you how to improve.

Financial Habits That Signal Trouble

 

#1 – Ignoring Your Credit Scores

Your 3 digit credit scores are the most important 3 numbers you need to know if you want to determine your financial shape.   If you ignore your credit scores, you could be headed for financial trouble.

Creditors, retailers, lenders and insurance companies label all current customers and potential customers.  Individuals who have a good credit score are labeled as a low risk customer; you definitely want to get that label.  When you are labeled a low risk customer you will pay less on your insurance premiums and pay lower interest rates on credit cards and loans.

A good credit score ranges from 750 to 850.   If your credit score falls between 300 to 750, you will be charged more for services rendered and could even be denied services.  Is that what you want?

Now do you see why your 3 digit credit score is so important?   Ignoring your credit scores will hurt you financially; so the sooner you learn your credit score the better.

Get Free Credit Score Help

If you aren’t sure what your credit score is, that’s okay, you can find out quite easily.   You can order a free credit score once a year from each of the 3 national credit reporting agencies.   Each of the credit reporting agencies have websites or toll-free numbers available for you; so there is no excuse to not order your annual free credit report.

Improve Credit Score

Anything you can do to improve your credit score will help.

  • Pay your bills on time; late payments look very bad to creditors and lenders.
  • Avoid missing any payments; payment history accounts for 35% of your credit score.
  • Keep your credit card balances low; credit utilization accounts for 30% of your credit score.

Late pays, missed payments and high credit card balances are bad financial habits that lower your credit score.   Improve on those financial habits and you will improve your credit score.

#2 – Over Spending

Financial shape and overspendingIf you spend more than you earn, where is the money going to come from?  Nothing is for free so sooner or later you will have to pay for everything you buy.  Most likely you rack up your credit card debt when you buy things you can’t afford.

Curb Your Spending

Learn to live within your means.   The best financial habit to develop is to not buy something unless you can afford it.   This is the best way to avoid crippling credit card debt.   If you buy things on a “need basis” vs a “want basis” you will help to curb your spending.

Live With A Budget

If you find it hard to live within your means you may want to consider writing up a budget and sticking to that budget.   The word budget sounds so restrictive, but it’s not.   A budget puts you in control of your spending.   You get to set the parameters of the budget, so can be as restrictive as you think is necessary.