Your makeup bag is probably armed with the essentials you can’t leave home without—mascara, lipstick, and sunscreen, to name a few. Are you that meticulous about your finances?
Having the right tools to build your best credit score is like having the right cosmetics to put your best face forward—it's not only about having the tools, but using them to work for you. Put your best foot forward towards great credit with Credit Karma’s credit essentials checklist.
Credit Karma’s Credit Essentials Checklist:
1. A Budget
Remember how Mom always told you to wear sunscreen? Knowing your financial limits and setting a budget is your financial SPF to protect you from your own bad spending habits. It should come before you even consider using a credit card or getting a loan, otherwise you’ll burn your credit score by spending without responsible planning.
2. The Right Credit Card
Don’t get the credit card you want, like a rewards card to score a trip to Hawaii. Do get a credit card suited to your spending habits, like finding the best-fit foundation for your skin. For example, if you carry monthly balances, you need a no-frills, low-interest credit card to cut interest charges. If you need to build credit, forgo retail and rewards card and opt for a secured card. Check out more credit cards.
3. A Loan
Whether it’s a personal loan, auto loan, mortgage, or student loan, loans are the mascara of credit tools that highlights your best features. Lenders perceive you as creditworthy if you can secure a loan and keep up monthly, on-time payments. A well-managed loan shows discipline, money management skills, and reliable payment habits.
4. A Bank Account
While bank accounts aren’t accounted in your credit score, lenders can use your banking account information to assess if you manage money well. A well-maintained bank account, which means healthy savings and no overdrafts, is like the extra pop of lipstick color to add to your financial profile.
5. Credit Report
This is your compact powder to check and touch-up your finances to make sure everything is in order. Check your credit report to guard yourself from identity theft and polish up your credit score by disputing credit report errors. You receive three free credit reports a year, one from each credit bureau, from AnnualCreditReport.com, so it’s necessary and costs you absolutely nothing.
6. Credit Monitoring
Your credit score is an over-all reflection of your financial health, so think of credit monitoring as your pocket mirror. Credit Karma gives your credit score for free and gives you a snapshot of your credit with the Credit Report Card, so you can track your credit score as frequently as you want to stay on top of any changes and updates.