4 Tips for Using Credit to Reach Your Financial Goals

Everyone has financial goals. When it comes to setting and achieving financial goals, many people think that it has to do with saving and having a budget. However, one thing that can negatively affect your ability to achieve your financial goals is your credit score. Below are 4 tips that you can use to make sure your credit score isn't going to stop you from achieving your goals this year.

Look At Your Credit Score

One of the first things that you want to do is to look at your credit score. One of the best ways that you can do this is by going to one of the websites to see what your credit score is, such as the Experian website. Knowing what your credit score is going to give you a place to start.

Check The Information in Your Credit Report

The next thing that you want to do is go through your credit report and make sure there isn't any inaccurate information on it. You want to ensure that it's complete, updated and there isn't any fraudulent activity on the report. If you've found errors, contact the company and let them know that you've found inaccurate information.

Establish Credit

If you're just starting out and you don't have any credit yet, you want to establish credit. Not having any credit can hurt you the same way that having a bad credit score can.

Below are some ways that you can do this:

  • Get a cosigner for a small loan amount
  • Get a credit card with a small credit amount
  • Apply for student loans if you're in school
  • Ask someone with good credit to add you as a user on a credit card. This will help even if you don't use the credit card since it will show that you are making payments, although it's the other person making payments.

Improve Your Score

If you have found that you have a low credit score, you want to do everything that you can to start improving it. Having a low credit score can be a roadblock for your financial goals such as:

  • Buying the House You Want – Although there are lenders out there who are willing to work with low credit scores, you may not be able to buy the house that you want.
  • Getting a new car – Dreaming of a high-end car? Unless you have a good credit score, plan to come with a large down payment or with cash to purchase it outright.
  • Getting a good job – There are a lot of companies who may not be willing to hire you if you have a low credit score. This is surprising, but your credit score is something that often is considered when you're applying for a job.
  • Getting a Fair Car Insurance Quote – When you are applying for car insurance, a low credit score often will cause you to have a higher monthly premium for your car insurance.
  • Making Other Large Purchases – Along with cars and houses, having a low credit score can make it hard to make other large purchases. Unless you have cash in hand and have been saving up, you will have a hard time buying a boat, beach house or even going on that dream vacation you've wanted to take because you won't be able to get a loan.

As you can see, a lower credit score can make a big difference in whether your financial goals are achievable. So you want to see what your credit score is and see what you can do to improve it or establish credit. This is one of the first steps to achieving your financial goals.