1. Dare I say the “B” word? Budget.

One thing that many people with low credit scores have in common is that they do not have a functional budget in place. This is a must to ensure that you can make all of your bills, have money for savings, emergencies and let’s not forget-fun! Creating a budget does not need to be rocket science. On a sheet of paper, simply list how much money you make. Then, list every expense in your life that you can possibly think of. Everything from rent or mortgage, car payment and gas, insurance and utilities to entertainment and amusement. Budget for that weekend trip to Vegas that you want to take next summer. You can have what you want, you just need to patiently budget for it!

2. Have champagne taste on a beer budget? Learn to live within your means.

This means, don’t charge that weekend trip to Vegas. Save for it and go when you can afford it. I cannot tell you how many of my clients have said to me “If only I had more money, then I wouldn’t need to worry about this credit thing”. On the contrary, people that have a ton of money usually have horrible credit because they have paid cash for everything. If you don’t have credit, you don’t have credit scores. Everyone, including the wealthy, needs to have a good mixture of different kinds of credit. It’s not more money that you need-it’s better planning for the money that you have.

3. Rain is always in the financial forecast. Save your money.

A “rainy day” fund is never a bad idea. What happens if tomorrow you lose your job and the interest rate on your ARM goes up? Sure glad you thought of that before it happened. Financial security is a wonderful feeling. Even if you have to begin building it with $10 a week. Start saving it today. Tomorrow you will be glad that you did.

4. Not handy with power tools? You don’t have to be to build assets and capital.

Whether you purchase a home or a vehicle, assets are a great way to build healthy credit using collateral. It can also help if you get in an unexpected financial bind.

5. Overdraft protection and insurance are priceless.

If your bank offers overdraft protection on your checking account-take it. You can avoid unnecessary dings to your credit by little “accidents” that may happen as a result of an overdrawn account. By obtaining health insurance, you have less chance of being sent to collections for a medical co-payment which is usually much more affordable than having to pay the entire bill. Also, the insurance that is offered on credit cards can be helpful if you find yourself out of a job and since 5% of the population was unemployed in 4/2008, this might be a good consideration.

These days your credit worthiness is tied to almost everything. To say it’s challenging to purchase a home, vehicle or insurance without good credit scores, is an understatement. Sometimes, even prospective employers want to take a gander at your credit report. What are you waiting for? Begin preparing today. Tomorrow you’ll be glad that you did.


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