Spring is here! The weather is comfortable, the grass is green, and birds are singing a wonderful melody. The last thing you want to do is put all that on pause just to manage your finances. If you’re anything like me, it’s as exciting as spring cleaning your house or apartment. Still, getting your financial house in order is a must!
Three things to do now:
Review your credit report
Items on your credit report can hurt you, so it is important to review it regularly. A bad credit report could affect your ability to get a job, an apartment, and loans like an auto loan. The Fair Credit Report Act (FCRA) makes it mandatory for all three credit reporting agencies to provide you with a free copy of your credit report once a year. Although the reports are free, they are not sent to you automatically; you need to order your copies.
Not to worry, you can order your copies using the official site setup by the three agencies, www.annualcreditreport.com. A useful strategy to adopt is to spread your request over the year. By requesting your credit report from a different agency every four months, you can react to errors quickly. Each agency provides information on how to report or dispute discrepancies in your report.
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Automate your payments.
If you haven’t already, now is the time to automate any outgoing payments that you make. It will help you avoid late payments, which are damaging to your credit, as well as prevent late payment fees and other penalties.
Most service providers provide an auto-draft option (your bill is automatically withdrawn from your bank account when it is due). If your service provider doesn’t offer auto-draft e.g. your landlord, or you make payments for an infrequent service such as a doctor’s visit, you can setup ‘bill pay’ through your bank. The way bill pay works is that you specify the amount and date that a payment is to be made, and your bank sends a check or electronic deposit.
Close rarely used store and credit cards.
Review your credit report for any open store credit cards, gas cards, or regular credit cards (issued by a major bank). If there are open cards that you haven’t used in a year, consider closing them.
Close store credit cards first; they are viewed less favorably than regular credit cards. Before you close any of your regular credit cards, think of the length of time it has been open and its credit limit. Closing a credit card that you have had for a long time, or one that has a high credit limit, could negatively impact your credit score.
Aim to have no more than two credit cards, and reserve them for emergencies or strategic use such as earning points (only if you pay off the balance at the end of every month!)
Now that you’ve de-cluttered your financial house, you can go back to enjoying spring!
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