2020 is in full swing and as we enter the promise of a new year, many of us have goals for how we can improve our health, happiness, and finances. But reaching these goals isn’t always easy. If your goal for 2020 is to improve your financial situation, but your credit score is becoming a major obstacle for you, worry not. We’ve come up with a few tips to help you make the changes you need to even if you’re struggling to boost your score.
- Build your credit score ASAP
- Look at alternative financing options
- Create a budget
- Consider a side job
There’s no denying it, your credit plays an important role in your finances. Whether you’re applying for a loan, looking at apartments, or buying a mortgage, having a bad credit score can have a severe impact on your finances. When trying to improve your financial situation, one of the first moves you should make is boosting your credit score. While it might take a long time to make a difference, the good news is, there are quite a few clear-cut steps that can help you improve your score:
- Calculate debt repayment
- Make paying down debt a priority
- Set up automatic payments
- Limit your credit card spending and pay cash or debit instead
As we mentioned, boosting your credit score could require years of good credit behaviour, but it’s certainly doable and the rewards are definitely worth it. Having a high-ranking credit score could help you get better loan terms, get approved for a competitive rental, or help you beat out the competition for a finance-related job.
While you’re working on your credit score, you still have to meet certain needs in order to survive and support a family. If you need to buy a home, for example, you might not be able to get approved for a mortgage with your current score. One option to consider is a non-QM loan which enables you to qualify for mortgages through non-traditional methods. You might use your current assets as collateral, for example. What’s more, non-QM loans also enable homebuyers to put down lower payments.
The thing to remember about non-QM loans and loans in general is that you have to pay them back no matter what. Before getting a loan, be sure that you’re able to make the payments each month so that you don’t find yourself in graver financial troubles.
If you need a personal loan to help you pay off your debt, look into peer-to-peer lending, which uses private capital to provide loans to individuals. The main thing to be aware of is that interest rates may be higher the lower your credit score is. This could mean you end up in greater debt than you were before. Before you make any financial decision, it’s critical to weigh the benefits and drawbacks of your decision.
Regardless of your credit score situation, a budget is always going to help improve your financial situation.
It’s easy to create a budget:
- Write down EVERYTHING you spend for a month – even a chocolate bar counts!
- Look at your annual expenses like insurance premiums and add those up. Divide by 12 to get an average ‘extra monthly cost’ for your annual expenses.
- Tag your expenses with things like ‘food’, ‘socialising’, ‘going out’, ‘school supplies’, and ‘rent’.
Now, look at these expenses. What can you cut back on? How can you save on your spending?
If you know that you need a budget, but aren’t sure how to start, you might use a budgeting app to help you get organized.
If you’ve got extra time on your hands, think about getting a side gig to help bolster your income. Thanks to the rise of the gig economy, there are now plenty of opportunities to make extra money as a contractor. Here are a few ideas:
- Drive for Uber or Lyft
- Freelance writing
- Take surveys for money
Use these tips and you’ll surely have the most prosperous year yet!