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How Reworking Your Budget Boosts Your Credit Score

Sarah Kaufman



Some of the easiest ways to help boost your credit score quickly are to pay off your credit card balances in full each month, pay them on time, and search for clerical errors on your credit report. While these practices will likely always hold true for achieving good credit, simply reworking your everyday budget could also give it the increase you’re looking for.

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Being aware of your spending helps cut back on credit overuse.

Whether you’re a veteran budgeter or just figuring out how to budget, it’s important to check back every few months and make sure there aren’t changes you should be making, or to see if there are areas where you’re overspending. Forcing yourself to reevaluate your spending habits may reveal you’re using your credit cards too often and failing to pay off the balance in full each month, which can result in heavy interest fees and a decline in your score. Similarly, you may find that your utilization ratio, which is the percentage of your credit limit you’re actually using, is too high. It’s important to use no more than 10 percent of your credit limit, according to MyFico.com.

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The right tools drive on-time payments.

When you’re looking at where your money is going, determine whether or not you’re paying your bills on time. Failing to make on-time payments will negatively impact your credit score, so it’s important to identify where it’s happening. If you find that you’ve been making late payments here and there, utilize tools like bill reminder and account management service Manilla.com, which will automatically send email or text reminders when your bills are almost due.

[More from Manilla.com: How to Use a Bill Reminder Service]

Re-examining budget categories could result in lowering debt faster.

One of the most important reasons why you should re-examine your budget every few months is that you can identify where you may be overspending or making unnecessary purchases, and you can focus on making larger payments toward your credit card debt and loans. Making larger monthly payments toward your debt helps you get out of debt quicker and, as a result, increases your credit score.

Financial planning encourages discipline.

Budgeting your money will inevitably change the way you think about financial management and, consequently, it could make you more responsible and disciplined overall.

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