Credit Power – Pump it Up!

Focus on Credit Strength

Have you noticed that fitness trends have been changing over the past few years? The focus has shifted from being skinny and lean to becoming strong. In the long run, a strong core is essential to being active and doing what you love.

Financial wellness is all about being financially strong. It’s not about restricting spending on things that matter to you. It is about building healthy financial habits that will keep you strong even in the midst of economic hardships. Tracking your nutrition and activity helps you make better food choices. Likewise, tracking your cashflow and financial habits helps improve your financial wellness.

Make Your Credit Resume Shine

Building a strong credit profile will make a significant impact on your overall financial wellness. This is the one thing you have 100% control over. You can begin improving your credit right now. Just like building a strong resume that reflects your skills, education and experience, your credit history shows your income character and capacity.

Here are 7 key pieces that contribute to your Credit Power and why they matter:

  1. 24 months of reported income ( 2 years of tax returns). This shows your ability to earn a consistent income to support your financial obligations.
  2. 12 months or more of positive debt payments (loan/credit card). This shows you pay as agreed on time.
  3. 24 months or more of continuous credit history with at least 2 active accounts. Go for longevity of account history and access to credit lines if needed (avoid losing your credit history).
  4. 5 years or longer without negative activity (past due, collections, repossession or bankruptcy). This shows your credit character.
  5. 30% or less of total credit utilization (total credit being used/total credit available). This shows you manage your cashflow and do not overextend your finances.
  6. Say NO to co-signing a loan/lien or lending money to family & friends. If your name is on it YOU are 100% liable for the debt and it impacts your access to credit in the future.
  7. 35% or less of your gross monthly income in total monthly debt payments (Debt-to-Income ratio). Although mortgage loans allow up to 43% DTI, that would max out your ability to access any additional credit if needed and will make you “house rich and cash poor”.

You can improve your Credit Power starting right now! Want help? Let’s chat! Schedule a call today to learn more.


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