You have dreams of home ownership. As you look at your credit report to make improvements and build your FICO score, pay careful attention to your credit cards. While a credit card is convenient and gives you spending power, especially during the holidays, they have been the pitfall of many would-be homeowners. Ensure your credit cards work for you by not missing a payment. Let’s look at how.
How Important Are Credit Cards to Your Score?
First, let’s look at why credit cards are so important. In addition to the convenience a credit card offers, it also shows banks and lenders how you utilize money that's available to you. By keeping your balance low compared to the available credit, but using some of the credit available, you demonstrate that you,
Can afford to maintain a loan and balance
Make payments responsibly and on time
That second point is extremely important. Your FICO score is 1/3 making timely payments. You can see, then, why making them on time is critical. Remember, late payments are often not a matter of what you can afford. High-income earners are actually more likely than low-income earners to make late payments.
Tips to Make Your Credit Card (and other) Payments on Time
Now that you understand the importance of your credit card to your credit score, let’s look at ways you can ensure you make payments on time. Self-discipline is an important part of responsible finances, but modern technology affords us some shortcuts to keep us less stressed.
Make Your Smart Phone Work for You
You keep your phone on you almost 24/7, so use it to your advantage. Set up alerts for your phone to remind you about your upcoming payments. It’s best to give yourself a 7–10-day window for your reminders to ensure that you give yourself time to make and send in payments. Remember, you have multiple ways to set up reminders including,
Set up text or notification alerts from your primary banking app
Set up text or notification alerts from your credit card company’s app
Set up a notification alert using your phone’s calendar or your Google calendar
Remember, it never hurts to set up multiple alerts. You could set up an alert 10 days out through your calendar. Then set one up 7 days out from your banking app. Finally, set up a “last minute” notification from your credit card app, still giving yourself about a 5-day window to make the payment.
Set Up Automatic Minimum Monthly Payments
Automatic payments are another way you can ensure you always have your credit card payments on time. You can set your automatic payments up through your credit card’s online banking or mobile banking app. You can also contact your credit card company directly to set up an automatic payment. In either case, set the automatic payment up for the minimum payment due. This will ensure that you always have an on-time payment each month. Remember, you can always make additional payments to pay down your balance or pay it off completely.
Are You or Your Client Looking for a Home Loan?
Let me help you or your clients reach their dream of home ownership. Go to www.meetwithmarat.com to schedule an appointment and talk about your or your client's options.