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Why Credit Matters

talessi@ariesfoundation.org

Ways To Build Up Your Credit Score

Does having a higher credit score really matter? Well, let's take a look at some of the things having a higher credit score could do for you.

By having better credit, then it is more likely that not only would you be likely to get approved for the following, but also it may impact how much you would be paying for:

  • Mortgage
  • Apartment lease
  • Auto loan
  • Personal loan
  • Credit card

Here are some suggestions and ideas that you can take to start improving your score.

1) Pay All Bills on Time

There is a formula that goes into calculating a credit score, but of all the factors your payment history carries the most weight. This represents how consistently you pay your bills on time, and being late even a few times can drop your score.

Note: If you have outstanding debt, then it is important that you make every payment by its due date. Staying current on your obligations helps raise your score, even if you can't get your debt paid off for a while.

But it's not just your debt payments you need to stay current on. Pay your "must-pay" expenses; rent &utilities for one, but if you medical bills, and then any other expenses that could go into collections if you ignore them or fall behind.

2) Remove Errors From Your Credit Reports

You have three different credit reports — one from each major reporting bureau (Experian, Equifax and TransUnion). But those credit reports may not be consistent, and may not all be correct.

Credit report errors aren't uncommon.

Whether you had an old debt that got squared away, but still shows as outstanding, or weird circumstances like someone with the same name having a debt that gets associated with your history (it happens!).

It's important to check your credit report for errors and resolve any you find. Unfortunately you may have to go to each credit bureau separately to get mistakes corrected. The way it works is you report an error and they let you know how to remedy the problem. Sometimes it may be with the credit bureau directly, but in other cases, you may need to reach out to the original creditor. You're entitled to at least one free copy of your credit report per year from each bureau, so take advantage of that.

3) Pay Off Existing Credit Card Debt

The average U.S. consumer had $5,525 in revolving credit card debt as of 2021. If your credit card balances are in that ballpark, they could be destroying your credit score.

A big factor in calculating credit scores is utilization, or the extent to which you're using your available credit. Your utilization ratio needs to be 30% or below to improve your credit score. If you owe close to $5,500 on your credit cards and your total credit limit is $10,000, that's a utilization ratio of over 50% — not good.

To improve that ratio, you need to put an action plan in place to pay down the debt. At ARIES Foundation we talk about using 1 of 2 methods; Math* or Momentum*

Another option that might make sense is consolidating your credit card debt that could make it a lot more affordable to pay off. A balance transfer could make sense depending on the situation (0% APR for a period of time).

You can also look at consolidating your debt via a personal loan. With a personal loan, you can borrow money for any reason. In this case, you'd borrow enough to pay off your credit card balances, then repay your personal loan in installments. A personal loan generally charges less interest than a credit card (the exception is a 0% introductory rate card, but those intro rates only last for so long). It also won't count toward your credit utilization ratio, because it's an installment loan, not a revolving credit loan.

4) Piggyback on Other People's Good Credit

Another factor in calculating a credit score is length of credit history. In this regard, being younger can work against you. If you've only been working and paying bills for a handful of years, you won't have the same credit history as someone with accounts in good standing for a decade or longer.

On the other hand, you can ask to be an authorized user on a family member's credit card that's been open for many years. That way, you benefit from that person's long-standing credit history.

Bottom Line: Don't Ignore Your Credit Score

Got Questions? Ask Us. We Can Help With That.

The ARIES Foundation for Financial Education, Inc is a nonprofit dedicated to the mission of trying to help everyone have a better relationship with their money.

Visit our website: www.ariesfoundation.org

Follow us on Facebook:www.facebook.com/aries4financial

Check out our videos on Youtube:www.youtube.com/channel/UC8XA1to8IHXsqsrGfWfRaHA

*MATH & MOMENTUM are 2 paydown strategies that the ARIES Team utilizes to teach individuals different ways to take control of your outstanding debt.

Want to learn more about debt control then shoot us an email: info@ariesfoundation.org

By Thomas Alessi January 5, 2025
Have you ever noticed how New Year's resolutions seem to lose their sparkle by the second or third week of January? If so, you’re not alone. Statistics show that most people abandon their resolutions within a few weeks of setting them. But why does this happen? The reasons often lie in how we approach our goals and the mindset we carry into the new year. One of the biggest culprits is setting unrealistic goals. Many of us feel a surge of motivation on January 1st and decide to aim for major life changes all at once—like losing 30 pounds in a month or working out every single day without fail. While ambition is admirable, these types of goals are often unattainable in such a short period, leading to frustration and eventual burnout. Another common issue is the lack of a clear plan. Resolutions often start as vague statements like “I want to get fit” or “I’ll save money this year.” Without actionable steps or measurable milestones, it’s easy to lose track of progress or get overwhelmed by the enormity of the goal. Without structure, even the best intentions can falter. Motivation fades quickly after the excitement of the new year dies down. Motivation is often fueled by novelty, but real change requires discipline and consistency—two traits that are harder to maintain over time. By mid-January, the initial enthusiasm often gives way to old habits, especially if we don’t have systems in place to reinforce new ones. Social and environmental pressures also play a role. Life gets busy, and as the demands of work, school, or family creep back in after the holiday lull, resolutions take a backseat. Pair this with temptations like junk food or the comfort of skipping the gym, and it’s no surprise that many people give up. Finally, many people don’t account for setbacks. Whether it’s missing a workout, overspending on a shopping trip, or indulging in an unhealthy meal, one slip-up can feel like a failure. This "all-or-nothing" mindset often leads to abandoning the resolution entirely instead of adjusting the plan. ________________________________________ Strategies to Overcome Quitters Day Breaking the cycle of quitting isn’t just possible—it’s entirely within your reach with the right mindset and strategies. Let’s dive into how you can overcome the challenges of Quitters Day and stick to your resolutions long-term. 1. Set Realistic and Measurable Goals The key to success lies in creating goals that are specific, measurable, achievable, relevant, and time-bound (SMART). For example, instead of saying, “I’ll get fit this year,” try “I’ll exercise for 30 minutes three times a week.” By breaking big aspirations into smaller, manageable steps, you’re less likely to feel overwhelmed and more likely to stay on track. 2. Build Consistent Habits, Not Just Motivation Motivation is fleeting, but habits are sustainable. Focus on creating daily or weekly routines that make progress automatic. For instance, if you want to eat healthier, prep your meals in advance or stock your kitchen with nutritious options. Building habits takes time, but once established, they become second nature. 3. Accountability and Support Systems Having someone to hold you accountable can make all the difference. Share your goals with a trusted friend, family member, or even a coach. Better yet, join a community or group with similar objectives. Knowing that someone is rooting for you—or counting on you—can keep you motivated during tough moments. 4. Reframe Setbacks as Learning Opportunities Setbacks are inevitable, but they don’t have to derail your progress. Instead of viewing a missed workout or a bad day as failure, see it as a chance to learn. What triggered the setback? How can you adjust your approach to prevent it in the future? Remember, growth isn’t linear—it’s a journey filled with ups and downs. 5. Celebrate Small Wins Big goals take time, so it’s important to recognize and celebrate progress along the way. Did you stick to your exercise routine for two weeks? Treat yourself to something meaningful, like new workout gear. Celebrating small milestones helps reinforce positive behavior and keeps you motivated for the long haul. 6. Focus on the Process, Not Just the Outcome Instead of fixating on the end goal, shift your mindset to enjoy the journey. For example, if your goal is to write a book, celebrate the act of writing every day rather than stressing about completing the manuscript. When you focus on the process, progress feels more achievable, and the outcome will naturally follow. 7. Leverage Technology and Tools Apps and tools can help you stay organized and motivated. Habit trackers, fitness apps, and budgeting tools make it easier to monitor progress and stay accountable. Life happens, and sometimes your resolutions need to evolve. Check in with yourself weekly or monthly to assess progress. Are your goals still realistic? Do you need to adjust your timeline or strategy? Being flexible ensures that your resolutions remain relevant and achievable. ________________________________________ With these strategies, you can break free from the Quitters Day trap and turn your resolutions into lasting change. The key is to approach your goals with patience, self-compassion, and a focus on progress rather than perfection. Change doesn’t happen overnight, but with consistent effort, you’ll be surprised at what you can accomplish.
By Thomas Alessi December 9, 2024
Budgeting and dieting are two of the most common self-improvement goals people set for themselves. Both aim to bring about positive changes—whether it's financial stability or better health. However, many find that sticking to a budget is just as challenging as sticking to a diet. Here’s why: 1. Restrictive Nature Both budgeting and dieting often start with a restrictive mindset. Just as a diet might cut out all your favorite foods, a budget might eliminate all your discretionary spending. This restriction can lead to feelings of deprivation, making it harder to stick to the plan. Over time, the temptation to "cheat" becomes stronger, whether it's indulging in a dessert or splurging on an unplanned purchase. 2. Unrealistic Expectations Many people set themselves up for failure by setting unrealistic goals. In dieting, this might mean expecting to lose a significant amount of weight in a short period. In budgeting, it could mean expecting to save a large portion of income without considering necessary expenses. When these high expectations aren't met, it can lead to discouragement and abandonment of the plan altogether. 3. Lack of Flexibility Life is unpredictable, and both diets and budgets need to be flexible to accommodate unexpected changes. A rigid diet plan doesn't account for social events or cravings, just as a strict budget doesn't account for emergencies or spontaneous opportunities. Flexibility is key to maintaining long-term success in both areas. 4. Emotional Factors Emotions play a significant role in both eating and spending habits. Stress, boredom, and happiness can all trigger overeating or overspending. Without addressing the underlying emotional triggers, it's challenging to maintain a diet or budget. Emotional awareness and coping strategies are essential for long-term success. 5. Short-Term vs. Long-Term Mindset Both dieting and budgeting often focus on short-term results rather than long-term sustainability. Crash diets and extreme budgeting can lead to quick results, but they are rarely sustainable. A more balanced approach that focuses on gradual, consistent changes is more likely to lead to lasting success. 6. Lack of Support Having a support system can make a significant difference in achieving goals. Just as people might join a weight loss group or hire a personal trainer, having a financial advisor or joining a budgeting community can provide the encouragement and accountability needed to stay on track. Making It Work To make both budgeting and dieting work, consider the following tips: • Set Realistic Goals: Aim for gradual progress rather than drastic changes. • Allow Flexibility: Build in some room for treats and unexpected expenses. • Address Emotional Triggers: Be mindful of how emotions affect your habits and develop healthy coping mechanisms. • Seek Support: Surround yourself with people who encourage and support your goals. • Focus on Long-Term Changes: Develop habits that you can maintain for life, rather than quick fixes. By understanding the similarities between budgeting and dieting, you can approach both with a more balanced and sustainable mindset. Remember, it's about progress, not perfection. Watch our Think With A Drink episode for ways to be better at handling your expenses: The Dreaded B Word
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