Whether you have zero credit card debt or a lot of it, I want to remind you to have compassion towards yourself.
💓 You're not the only person who charged items to a credit card because you wanted something that someone with a higher income could easily afford.
💓 You're not the only person whose credit score has been impacted because you got into debt for a loved one.
💓 You're not the only person who has credit card debt because your expenses increased while your income stayed the same.
💓 You're not the only one with a credit card balance because you turned to Target to get some stress relief during the pandemic.
Unless someone taught you explicitly how to budget and to save for emergencies, there is no way you could have avoided credit card debt especially if you have been impacted by unemployment, health issues, and caring for others financially.
Wherever you stand financially at this moment, you are choosing to increase your financial literacy and take action to become financially secure now.
Now with that said, let's make sure you understand these credit score basics...
1) The ideal credit score is anything above 760. Anything beyond that is just extra sprinkles on our ice cream sundae.
2) Your credit score is going to vary based on where you are pulling it from. There are a lot of different credit score models out there. FICO Score and VantageScore are the most popular ones.
3) All credit score models are going to look at five factors.
Age of Credit History
New Accounts Opened
Total Credit Usage, balance and available credit
4) Not making minimum payments on time and using more than 30% of your available credit limit will decrease your credit score.
5) If someone makes you an authorized user on their credit card, their credit behavior will impact your credit score. This could be a good thing or a bad thing.
Now, let's talk about how to be clever with credit cards.
1) Focus on having credit cards that allow you to increase your credit limit with ease. Credit cards associated with banks or credit unions are better than department credit cards. Increase your credit limit poco a poco, every nine to 12 months.
2) Don't use your credit cards to buy stuff that you do not have the cash to pay for. Always pay your credit card balance in full in order to avoid paying interest. This will only be possible if you have an emergency fund and intentionally choose to spend less than you earn.
3) Make a plan to pay off your high-interest credit card debt ASAP. Depending on your extra cash flow, you may be able to eliminate your credit card balances within a month or multiple years. Stay focused poco a poco, you can eliminate your credit card debt.
4) Even if you pay your credit cards in full each month, never charge more than 30% of your available credit limit. This means if you have a credit card with a $1,000 credit limit, do not charge more than $300 to that credit card because it will decrease your credit score.
5) Be intentional with your credit cards. Use this Clever with Credit Cards.pdf to organize important information you should know about each of your credit cards. If you use credit cards for rewards, make sure you know which cards offer you the best cash back for gasoline, restaurants, groceries, etc and use them accordingly.