Having a great credit score is the best way to take advantage of the lowest rates and purchasing benefits that are out there so if your credit score is not in good shape it could be costing you hundreds of dollars each month in interest.  We know that late payments are a huge factor, but take a look at a few other ways your credit score could be negatively affected.

Balance is Too High

A large factor of your credit score is the debt balance compared to the available credit, so the smaller that window is, the more your score is hurting.  If you continuously carry a high balance on your account, then credit limits may no longer be increasing so you are stuck at limits.  Begin paying down balances and not using the card for additional purchases to increase the gap in available credit.

Not Regularly Using Accounts

For accounts that you have paid and keep a zero balance and have left it open could be hurting your score.  Regular use such as charging, then paying off the entire balance by the statement due date will increase your score to show that you are a responsible borrower by not carrying over a balance to the next month.

Opening New Accounts

Each time you have a lender check your credit the scores will decrease, so limit opening new accounts, especially if you do not need it, as the inquiry will stay on your report for the next couple years.  Find a great mortgage rate that you can stick with, and a credit card with low interest and rewards, and you are golden.

Not Checking Credit Report

Checking your own credit report does not lower your score at all, so take on top of your report.  Not checking your report is setting up for fraudulent activity to be present on your account without you even knowing.  Not only could accounts be used, but depending on the severity, new accounts could be opened in your name.

Taking on a Debt Settlement

If your financial situation has hit and all time low and you have decided to take on a debt settlement, then you can expect your score to take a hit.  It shows the lender you can no longer handle the account, so the account may be frozen or closed, so depending on how many accounts, you could be starting from scratch when the settlement is over.

Having great credit takes years to work up to with a solid payment history while carrying minimal debt, so why not get rewarded for your hard work.  Credit is the major factor in a loan decision, not only could it make or break the deal, but if your credit is less than excellent, then you could be paying astronomical amounts of interest, and for large purchases like a mortgage, that could be hundreds of dollars extra a month in just interest!  Not only do you need to improve your credit score for your own expenses, you also get to take part in the perks for having a better credit score.

Interest Rates

This is the most important, because as mentioned, you could be paying hundreds of dollars a month extra on only interest each month compared to those with great credit.  If you have a $150,000 mortgage and are paying even 1% interest higher than those that were approved at over 3%, over a 30-year mortgage you could be paying $35,000 additional during the life of the loan.

Higher Credit Limits

Those with great credit will not have a low cap on what they are able to spend each month, as the credit company will want purchases to continue to be made.  If you continue to pay off your balance each month and make payments on time, you will see your credit limit continue to rise.

Better Car Insurance Rates

Some may be surprised that your credit score has a factor into whether or not you are insurable, but although it does not have to do with your accident record, it does paint a picture to the lender to decide if you are a responsible borrower, and if you have defaulted on anything in the past, chances are you will not have an issue paying your insurance premium or be a reckless driver.

Rewards Cards

Lenders will approve you to have rewards cards which provide cash back, points, or airline miles, for example, to those that use the card for purchases.  The new Costco Citi card will have up to 4% cash back, which is huge, so why not receive a check every year just for using the card each month.  Credit limits are higher as well to allow for most or your monthly expenses to be put on the card, so as long as you are disciplined enough to pay off the balance each month, this is a great perk.

As the tax filing deadline approaches and returns are almost finished being processed, for those that are getting a refund this year you may start to already be adding items to your online shopping cart in anticipating for when you see funds show up in your account.  Before you go and see the money disappear in the matter of a few clicks and grow tired of the most likely unnecessary items that you purchase, there are plenty you could have done with the money instead.  Sure going on a vacation could be a great escape after the winter weather, feeling the need for long overdue sun, but do not go to the travel sites just yet and get your hopes up.  A long weekend away could be filled with a few lasting memories, but remember your refund is not a gift from the IRS, it is an overpayment taxes that you paid throughout the year, so there are plenty of ways to put your money to good use.

Pay Down Debt

If you are paying balances on high interest credit cards each month then it is a no brainer to put your refund towards paying down debt.  Making low to minimum payments does nothing to get your out of debt, especially with some cards charging upwards of 16% interest, it would take many years to pay off depending on the balance.  It sure is not a fun way to spend your refund, but it is the most responsible.

Use for Home Improvements

Upgrading your home will not only give you satisfaction in your own home, but it also adds value at the same time.  In the interior consider replacing outdated appliances, worn out carpet, or even a fresh coat of paint can give life to a room.  On the outside, planting flowers, adding new mulch, or re-staining your deck will increase curb appeal and outdoor enjoyment for the upcoming summer.

Build Funds for an Emergency

Saving money for a rainy day does not mean going on a shopping spree, but having the funds available to you in case of emergency.  Experts have always claimed to need 3-6 months of expenses in an account in case of broken appliances, unexpected car repair, or worst scenario, a job loss.  This account may not be one were you have to add often, but being prepared is better than being unprepared and having to put it on a charge card.

 

Have you ever wondered why companies invest so much money into background checks on potential new hires? Does it seem weird that most want to pull your credit report as a means for determining gainful employment? Well, if you consider that on average, there is a $2,000 per employee cost that a business incurs annually as a result of their employees’ financial stress, then it shouldn’t be a surprise that employers know it’s important to do their due diligence in ensuring financially stable workers.

For background, there are many ways that an employee’s poor financial situation can result in losses to a company. Businesses could be prone to financial improprieties like theft. Or perhaps employees spend so much time worrying about their own financial situation that they are unable to focus on their work—taking away from their productivity and engagement which is never good for an employer. You might even be applying for a financial management type position, in which case, poor management of your own finances could reflect poorly on you. In any regard, it’s good to know you are not alone. Nearly 85% of the American working population report that they feel some sort of financial strain and stress. That said, strength in numbers doesn’t mean we should sit around and not try to tackle the issues of financial stress head on. It’s becoming increasingly important that employers understand the cash constraints of working Americans and that we, as the employees, look to work for businesses that offer some level of financial wellness programs. While it may sound cliché, it’s these types of programs that can help people get on track with their finances and not in a spiral of debt.

Truth be told, debt is burdensome and acts much like quicksand. The harder you fight to get out of it the quicker you dig yourself deeper into it. According to a recent debt study performed by NerdWallet, the average US household has over $130,000 in debt. Over $15,000 of that is in credit card debt alone. We have heard the struggles of the millennial generation as they struggle to find jobs and the ability to move into their own places. It’s no wonder that 40% of these millennial have used various forms of financing like pawn shops, payday loans, and advance loans on tax returns to fund their lifestyles over the past five years.

Fortunately, there is a company stepping in and partnering with employers to aid their employees toward fiscal responsibility and well-being. That company is Zebit. Zebit is a free financial wellness benefit that employers can sponsor—at no cost—and offer to their employees. The benefit is two-fold. First, it offers financial wellness education so you can learn everything from basic financial literacy to how to create a rainy day and retirement savings plan. The library is packed with tools and resources to give employees financial assistance. There is also an app called the Zebit Instant Budget App, which you can download and use on the go. By using the app, in a matter of minutes, you can receive a recommended budget to see how your expenses compare to others in your area.

The second part of the Zebit program gives employees access to an interest-free and worry-free credit option, called a “ZebitLine.” This is basically a line of credit that can be used to purchase items from a Zebit marketplace containing thousands of products and services at competitive prices. I’m not advocating that you utilize such a service to go on a spending spree, but it provides employees a better payment option when they make an unexpected purchase. With Zebit, employees can pay with their ZebitLine and pay it off over time, while never paying any interest or fees. Perhaps you need a new washer or dryer because your old one finally broke down and you can’t afford one. Maybe you just want to buy a new TV, but want to do so in a responsible way without accruing interest on a credit card. It’s great because you can shop in the Zebit Market, pay with your ZebitLine, and obtain the item while paying for it over time via credit or debit deductions until the product is paid off. You might call it a zen moment knowing all you ever paid for was the price of the product without any ridiculous interest or fees attached to it. Some people might otherwise be forced to take out a payday loan or put it on their credit card and carry a balance, or even worse, open a store card and carry a balance. Store cards have some of the highest interest rates out there.

I encourage employers to take a look at this free benefit for their employees, and for employees to bring this benefit to their attention. Check out all that Zebit has to offer, and make sure to download their free Instant Budget mobile app I mentioned earlier—available for download at the Apple App and Google Play stores—which takes the guesswork out of budgeting by automatically creating a customized budget based on income, where someone lives, and the number of people in his or her household.

Sure, tax season is still months away but, for those consumers who start handling some tax tasks now, the payoff can be quite large. In fact, with so much time between now and next April 15, you’ve got plenty of time to take the steps you need to make and cut your tax bill significantly. Below are a number of tax issues that you definitely should handle now in order to do that. Enjoy.

Tax Task 1: Pay your quarterly tax payments. If you’re self-employed or receive a sizable amount of income that isn’t subject to withholding taxes, now is the time to make up for any payments you haven’t made so that you don’t get slapped with a penalty later. The fact is, the sooner you pay that money, the smaller your penalty will be.

Tax Task 2: Make a decision about who will claim the children or any other dependents. If your divorced but share custody with a partner or ex-spouse, or responsibility for a relative, only one of you will be able to deduct that person or persons as a dependent on your taxes. The Earned Income Tax Credit for children is this way too so, while you have the time, figure out the math that makes sense for both of you.

Tax Task 3: Apply for an exemption if you haven’t gotten insurance yet. Unless you meet certain exemptions, you’ll be facing a tax penalty this year if you still haven’t purchased health insurance. Talk to your tax specialist about that and get your exemption number from the Health Insurance Marketplace.

Tax Task 4: If you have a flexible spending account, use that extra money. With most companies you’ll be able to carry up to $500 into next year, 2016, but it would be a shame to leave any additional money behind. Understanding the rules of the plan your company has is vital, as well as evaluating your expenses and looking ahead to what they might be in 2015

Tax Task 5: Decide whether you need to accelerate or reduce your income. For example, for some consumers it might make sense to prepay their mortgage and their real estate taxes in 2015, but for others paying them next year might be more advantageous. You’ll need to calculate where you are this year financially, as well as where you expect to be next year, in order to do that.

Tax Task 6: Make sure to offset capital gains and losses. If you were fortunate to sell stocks at a profit this year, make sure to sell some other stocks at a loss to reduce the amount of taxes that you’ll owe in 2016.

Tax Task 7: Give your accountant a call. Frankly, now is the best time of year to talk with your accountant because they won’t be nearly as busy as they will be come January 1.

Tax Task 8: Stuff as much money as you can into your retirement accounts. If you haven’t already, contribute the maximum to your IRA or 401(k) as stepping up your contributions now will definitely cut your liability, tax wise, when you file in 2016.

Tax Task 9: Don’t forget to give to charity. If you itemize your taxes any donations of cash or hard goods that you made to qualified organizations it’ll cut your tax bill next year. Remember that you’ll need a written record of your contributions if they are more than $250 and, if they’re  more than $5000, an appraisal.

There you go, 9 Tax Tasks that you can easily take care of now so that, come tax time next year, you’ll be well ahead of the game.