In the conversation surrounding careers and career changes, we frequently forget to reinforce the fundamentals that are used to build strong finances and personal credit in the first place. Strong personal credit skills will help build wealth and minimize debt, no matter what career path you choose. It is common for people to look for the biggest earning opportunities, in order to make up for things that are wanting in the credit department. We’ll cover some of the ways to make the most of your credit so that your income can stretch farther, no matter where you work.
Pay All of Your Bills on Time. When we pay bills late, there are consequences. Late payments are reported to Credit Reporting Agencies, private companies that keep track of the credit histories of all consumers. After a few days late, a bill is likely to be reported to the Credit Reporting Agencies, where it will sit on your credit report and lower your credit score. How long does a late payment stay on your credit report? For seven whole years if you don’t do anything about it. In that time, it will cause interest rates to be higher for you than it will for people with clean credit records, which will cause you to pay much more for loans than other people. Access your credit report to see where you stand, and resolve negative marks either through payment or through dispute.
Use Credit (Not Just Cash). There is a school of thought that calls on consumers never to use credit at all, instead paying for their lives with cash. This is a well-meaning philosophy meant to help people live beneath their means, but if a consumer never uses credit at all, there will be no credit history at all. Without a credit history, you won’t be able to borrow money for auto or home loans, or you may have to pay more/jump through a lot more hoops to secure this kind of financing. It is possible to perform credit behaviors (like opening a credit card) without having outstanding balances. This way, you’ll have a beginning to your credit history which can start you on the road to strong established credit.
Save and Spend Wisely. When we save and spend wisely, we are able to live with less dependence on credit. This doesn’t mean that you won’t use credit at all, just that you won’t have to use it in order to live. Living beneath your means and creating an emergency fund will allow you to create financial stability that will be yours whether or not you choose to use much credit.
In the end, building strong credit history isn’t about how much you use credit, it’s about how wisely you use it. These methods are just a few of the ways that you can make your credit pristine, regardless of how much you make in your career. With this taken care of, you can enjoy your career for its own sake, without being stuck to it just to keep your personal finances afloat.