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Personal Finance

How to Start Investing. Types of Investments

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Are you curious about investing? Do you want to learn more but don’t know where to start? You are not alone.

How to start investing. Investing 101. Investing for beginners. How to start investing and types of investments

How to start investing is something you do not learn in high school. That is unfortunate because when it comes to investing time is key. It is best to invest for long periods of time. Starting to invest when you are young is one of the best financial decisions you can make. That being said, even if you didn’t start early you should start as soon as possible.

Investing is a broad topic and I would not be able to cover the entire topic of how to start investing in just one post. This post will be the first installment in my investing series. The goal of this series is to break down investing into easy to read posts. I also want to help people understand that investing is not as complicated of a subject as it may seem.

For this first post on how to start investing I am going to focus on the different types of investments. There are multiple avenues that you can take when deciding how to invest. As you learn more about investing you may decide to have multiple types of investments. That is a great way to diversify your financial portfolio but for now I will simply explain the types of investments you can make.

This list does not include every type of investment available. This list only includes the investments that I am most familiar with.

How to Start Investing: Types of Investments

Retirement Accounts

There are several types of retirement accounts. When thinking about how to start investing this is a good place to start. Retirement accounts include 401k, traditional IRA, Roth IRA, 403b and 457b. There are several different retirement accounts to choose from. Some retirement accounts are employer-sponsored. Each of these plans has it’s advantages and disadvantages. Based on the plan you choose you can contribute a certain amount per year. Employer-sponsored plans allow you to contribute through a payroll deduction and have tax advantages in that they lower an employee’s taxable income. Each retirement plan has it’s own rules for how it is taxed, how to withdraw money and penalties for early withdrawal. Again, if you’re looking for how to start investing you should look into retirement plans. If your employer offers an employer-match you should take advantage of that benefit because it is free money that will benefit you.

College Savings Accounts

College savings accounts allow you to invest money that can later be used toward qualified educational expenses for your child. Qualified expenses vary based on the plan you choose. The key with these accounts, as with most investments is to start as early as possible so your money has time to grow and accumulate interest. Two types of college savings accounts are a 529 plan and an ESA (education savings account). The 529 plan has different rules depending on the state that your plan is opened in. For this account you can withdraw money for qualified expenses tax-free. An ESA is also a tax-advantage account. You have to meet certain qualifications and there are certain restrictions for these accounts. If you are wondering how to start investing for your child’s future a college savings account is a great option.

Money Market Account

A money market account accrues interest and is offered by a bank or credit union. These accounts are similar to traditional savings accounts but pay much higher interest rates. These accounts typically require that you keep a minimum account balance and may charge fees if your account drops below the required balance. The accounts are protected by the Federal Deposit Insurance Corporation (FDIC). These accounts offer higher interest rates than traditional savings accounts.

Money market accounts may allow the account holder to use checks or a debit card to access the money in this account. These accounts differ from traditional checking accounts because you are limited in the number of transfers you can make each month. You can be fined if you exceed the maximum number of transfers. If you are learning how to start investing this may be a great place to start. One big advantage of a money market account is that you cash is easily accessible to you.

Stocks

This is probably what most people think of when researching how to start investing. Buying stock is buying ownership in a publicly traded company. It can also be called shares or equities. The ultimate goal when buying stock is that the value will increase after you purchase it and you will make money when you decide to sell. Conversely, if the stock price goes down you can lose money. Buying stocks can be risky, as most investments are, but the best course of action is to hold onto your investments. Don’t fall into the trap of selling as soon as the price drops. Stock prices go up and down but history shows us that holding on to your investments is the best course of action.

Bonds

This is typically considered a safer investment but you will not get as great of a return as you would with other investments. Essentially a bond is when you lend money to a company or the government for a specified period of time. You will receive interest payments on the money you lent. Once the specified period of time is over you will receive your initial deposit back. Bonds used to be extremely popular but have gone down in popularity over time.

Mutual Funds

This is a managed fund that pools money from several different investors. The money is then invested broadly over many different assets. If you want to learn how to start investing I highly recommend looking into mutual funds. This is considered a diverse investment because your money is invested broadly versus investing in one type of stock or in one bond. When you invest in a mutual fund you own a portion of that mutual fund and therefore you own a portion of it’s assets as well.

How to start investing. Investing for beginners. There are so many types of investments you can make. The best course of action is to have a diverse investment

Commodities

Essentially commodities are physical products. The main types are metals, livestock and meat, agriculture and energy. If you are looking for how to start investing some people consider commodities to be a somewhat safe investment. If you look at metals in particular that would include gold, silver, copper, etc. Some people choose to invest in precious metals because there is only so much to go around. Precious metals cannot be made so there is only a finite amount available. They are considered to have intrinsic value and can be a good way to diversify your investments.

Cryptocurrency

This is a relatively new type of investment. Cryptocurrency is a digital currency that is secured and virtually not able to be counterfeited. This type of currency is not issued by a central authority so there is no government involvement. If you look up how to start investing you will find that there is a lot of buzz surrounding cryptocurrency and why it’s a good investment right now. Some may consider this to be risky because it is so new and we are not sure of the future of cryptocurrency. The most popular by far is Bitcoin but others on the market include Litecoin, Peercoin, Namecoin and Ethereum.

Business

If you have some capitol and are looking for how to start investing you can consider investing in a business. This can be done two ways. First you can invest in a company in exchange for equity. This means that you pay for partial ownership of that company and in exchange you get paid if the company turns a profit. Secondly you can lend money to a business. From this you will make money on the interest that the company will pay as they pay back the loan.

Real Estate

There are several different ways to invest in real estate. When researching how to start investing it is a good idea to at least look into real estate. These investments can diversify your investment portfolio. One way to invest in real estate is to invest in a Real Estate Investment Trust (REIT). A REIT is a company that owns income-producing real estate. This can be office buildings, apartment buildings, shopping centers, etc. The next type of real estate investment is rental properties. You can purchase a home or apartment building and rent it out for a profit. You can rent to long-term tenants or to a service like AirBNB. Another way to invest in real estate is by flipping houses. This is a fairly simple concept but can be risky. Essentially you purchase a home that needs improvements, you pay for the improvements and then resell the house for a profit.

Yourself

I had to include this on this list of investments. If you are looking for how to start investing this is something that I highly recommend. Investing in yourself essentially is finding ways to better yourself and your financial situation. This can include learning new skills, developing your creative side, educating yourself, bettering your health, etc. This is a great place to start especially if you are in debt or do not have much money to invest. Focus on investing in yourself and how you can better your financial situation. Along with what I previously mentioned investing in yourself can include creating your own business or product. If you have a business idea or a product that you believe in try making that a reality. Starting your own business won’t be easy but it may be a great investment for your future.

There you have it. How to start investing

As I mentioned before investing is a broad topic and there is no way to cover everything in this post. If you want to learn how to start investing you first have to learn about investments. Here I have listed common ways to invest but there are definitely more investments out there that you can look into. Please follow me on Instagram or YouTube so you can see when I post more content to my investing series. Thank you for stopping by!

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Personal Finance: How to Get Your Finances in Order

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Personal finance covers a range of topics including budgeting, expenses, debt, banking, mortgages, saving, insurance, investments, retirement taxes and estate planning. Essentially it encompasses all things money management.

personal finances. A guide for how to start a personal finance journey. A picture of a woman's hands counting cash

Personal finance is a loaded topic. There is so much to talk about when discussing personal finance. The core of my content really comes from my personal finance journey. This week I wanted to go back to the basics of personal finances. Where do you start when you want to learn about personal finances? What are the first steps someone should take if they want to get their finances in order?

These are great questions. You have to start somewhere. Competency in personal finance is a learned skill. I made a lot of money mistakes in my life. In my twenties I was not great with money. I can probably write an entire post just listing my money mistakes but I will spare you. Since starting my blog, Youtube channel and Instagram I have seen so many people say that they don’t know where to start when it comes to personal finance.

It occurred to me that I’ve never taken the time to inform my audience of where to start when you want to get your personal finances in order. It’s important to learn about personal finance and be motivated to makes changes. However, if you don’t know how to start getting your finances in order then the knowledge your gaining is going to go to waste. So, here are the steps I think you should take if you are motivated to get your personal finances in order.

Let’s get started

1. Calculate your income and expenses

This is the best place to start when going over your personal finances. First you need to determine your Net income. Net income is the amount you bring home after taxes and deductions. The amount that actually goes into your bank account. It’s very important that you only count what you’re receiving. Just because you make $65,000 per year does not mean you should budget for that amount. Budget for the income that you are actually able to spend.

To calculate your expenses I recommend going through your last 3 months of banks statements and credit cards statements. That way you can get a true average for what you spend on a monthly basis. If you use cash or Venmo be sure to calculate those expenses as well.

2. Calculate your debt

When discussing personal finance we have to talk about debt. Since you’re early on in the process let’s not worry about any outstanding mortgage. At this stage we’re going to look at all other outstanding debt. Student loans, personal loans, car loans, credit cards, etc. Write down all of your debt amounts and also write down the total amount of all of your outstanding debt. It’s very important to know these numbers. If you do not have any debt that’s great. You can skip right over this step.

3. Identify your needs vs your wants

Before you create a budget you need to have a clear understanding of needs vs wants. Needs refer to items in your budget that you cannot be without. Food, transportation, housing & clothing are all examples of needs. Wants refer to items that are convenient or desired but not necessary. This step is important when trying to get your personal finances in order because it sets the tone for your budget. Needs have to be included in your budget but wants will only be included if the budget allows it.

4. Create a realistic budget

Emphasis on the word realistic. A budget should be restrictive in a sense. It should allow you to pay for your needs but also keep you from over spending. If you are just starting to get your personal finances in order I highly recommend having a budget. Start with your needs. You have to include your needs in the budget. Then, if there is room in the budget, you can add in your wants.

5. Create an emergency fund

Now that you’ve written down your income, expenses debt, needs, wants and created a budget it’s time to create an emergency fund. This is a savings fund that is created specifically for unplanned emergency expenses. Life happens so you should be financially prepared in case of an emergency. I recommend at this stage having an emergency fund of $1000. Keep this in a savings account that is easily accessible but be sure to reserve it for true emergencies. This is a very important step. I do plan on doing an entire post about emergency funds because It’s so important and it will keep you from incurring more debt in the event of an emergency.

If you do not have debt, or once your debt is paid off, I recommend upping your emergency fund. It’s a widely accepted rule that you should have 3-6 months worth of expenses in your emergency fund. This will come in handy in the event of job loss or an unexpected medical emergency.

personal finances. What to use your emergency fund for. Emergencies. unexpected costs like car repair, home repair, medical bill or other unplanned costs that may come up

6. Start to pay off debt

Once you have an emergency fund of $1000 it’s time to start paying down your debt. Again, if you’re debt free you can skip this step. We are also not counting a mortgage as debt for this step. I recommend using a zero-based budget. Essentially that means that every dollar you bring in is allocated to something. There is no “extra money” left over. After you’ve budgeted for your needs any left over money should go to making extra debt payments. Getting your personal finances in order means getting rid of your debt as fast as possible. Debt is costing you so much money in interest and it holds you back in your financial journey. I highly recommend paying down debt before adding any “wants” into your budget. Try to stay motivated and send every “extra” dollar toward your debt.

There are several different ways you can go about paying off debt. Two well-known ways are the debt snowball and the debt avalanche. These are both great options. You should research both and choose the one that will work best for your personal finance journey.

7. Don’t get discouraged

If you’re not used to living on a budget give yourself some grace. Learning to live on a budget can be difficult. It takes a few months to get used to. You’re probably going to overspend or forget to add items to your budget at first. Go over your budget at the end of every week or month and determine what you need to work on. I promise, budgeting gets easier after time. I also recommend trying new budgeting tools until you find what works for you. You can use pen & paper, budgeting app, spreadsheet, etc. Take a few months, try not to get frustrated and find what works for you.

8. Educate yourself

If you are on a journey to improve your personal finances you should be proud of yourself. One of the best things you can do on this journey is continue to educate yourself. There are so many great resources out there. Numerous books, podcasts, YouTube channels, blogs, etc are available to access for free. I highly recommend looking through some of these resources and finding people that you trust to give you advice. I also recommend getting personal finance advice from multiple sources and ultimately finding what will work best for you and your financial situation.

9. Don’t compare yourself to others

Personal finance is personal. Everyone has to start somewhere. Some people are taught good money habits from their parents. Others have to make a lot of mistakes in order to learn good money habits. Some people come from privilege and have assistance with paying for college or a down payment on a home. Others may not have had any help and may have acquired a lot of debt in order to get where they are. My point is that you cannot compare your financial situation to anyone else because you simply don’t have all of the facts. Focus on your journey and the progress that you are making. You should be proud of yourself simply for trying to get your personal finances in order.

personal finance is personal. do what works for you

10. Continue to re-evaluate your situation

Getting your personal finances in order is a journey. It’s something that needs to continue for your entire life. It may get easier as time goes on. Especially if you’re paying off debt and continuing to learn how to better your financial situation. Even as you learn and become comfortable with budgeting, saving or investing you still need to “check in” periodically. You need to go over your budget and update or adjust it as your financial situation changes.

You will also need to review your emergency fund and possible re-fund it if you have had to use it. Once your debt is paid off you will need to determine where you “extra” income will be sent to. I highly recommend investing but I will save that for another post. Essentially you want to make sure that your budget and your actions are continually in-line with where you are on your financial journey.

These steps that I’ve outlined will help you to start taking control of your personal finances.

As I mentioned before, personal finance is a loaded topic. This post is really just a basic outline for how to get started. Each of these steps can easily be expanded into an entire post. If you are just starting a personal finance journey I hope I can be a great resource for you. Feel free to check out my other posts and leave any questions or comments you may have and I will be sure to respond. Thanks for stopping by!

Other posts you may enjoy:

How to Improve Your Credit Score

How to Save Money on Groceries

Side Hustle Master List 2021. Do You Need a Way to Earn Extra Money? Read this.

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Are you looking to earn some extra cash? Have you ever considered trying out a side hustle?

I created this list of 21 side hustles for anyone who is looking to earn some extra money. Side hustles are a great way to increase your income this year. A side hustle is basically a side job or hobby that can make you some extra money. If 2020 taught us anything it’s that nothing is guaranteed. Don’t let yourself get caught off guard without a financial plan.

One of the best choices you can make for your personal finances is diversifying your income and creating multiple streams of income. Don’t limit your income to just one source. Give yourself multiple ways to earn money and your budget will thank you.

Side hustles 2021 edition. do you need to earn extra money? Pictures of a person at a desk, a camera, a computer, a pile of money, a bouquet, makeup, wifi, car, man walking dog, book, youtube symbol and arrows

A side hustle that may require an upfront investment:

Here are some examples of side hustles that may require you to put in some of your own money before you start to make money. Just think of these as an investment in your future and it’s always a good idea to invest. In this case you are investing in yourself.

1. Become a notary public

This may not be what you think of when you hear “side hustle” but hear me out. This is a great option because you can do notary services part-time while still maintaining another job. You will most likely have to take a course and then pass an exam. You may also have to do continued education every few years. Research the requirements for you state. This option can definitely earn you some extra money.

2. Take/sell photos

For this you may need to invest in a nice camera, if you don’t already have one but it could be worth the investment. People are always looking for photographers for milestones like birthdays, baptisms, graduations & engagements. If you’re interested in photography this is the side hustle for you. You can find photography classes online or even watch free YouTube videos to learn the basics.

Selling stock photos to different websites or advertisers is another great idea if you like photography. People are always looking for stock photos. They can be used for blogs, social media, advertisements and other projects. People are willing to pay in exchange for not having to take the photos themselves.

3. Bookkeeping

You can offer bookkeeping services to local businesses or companies. Many times you can find companies that will allow you to do bookkeeping from home. You can even do booking in your spare time if you have another job. If you are good with numbers and perhaps you are proficient with excel, QuickBooks or any other bookkeeping software you can do this as your side hustle. If you are not qualified to be a bookkeeper you can find programs at your local community college or adult school. You can also take online bookkeeping programs/certifications. Again, it may be an upfront investment but it’s a great option for earning some money on the side.

4. Make items to sell

If you invest in a cri-cut machine or a T-shirt press and you can make and sell your creations. A cri-cut machine can do so many things. You can create custom vinyl decals, cut shapes out of paper and even cut fabric. With just one cri-cut machine you can customize cups, banners, wall signs, T shirts, etc…

Are you a talented baker or decorator? Invest in some supplies for baking or treat decorating and sell some treats. If you are creative and you have a steady hand you can make beautiful treats that people will buy for parties or other events. There are a ton of tutorials for baking/treat decorating on YouTube that you can watch if you need to improve your skills.

This is one of my favorite options for a side hustle. It’s a great option for someone who is creative. You can sell your designs or treats on Facebook marketplace, Instagram, Esty or local pop-ups.

5. Flip furniture

This is another great idea if you’re creative or crafty. Do you have some old furniture that you can sell? You can also go to a local thrift store or garage sale and buy some inexpensive pieces. You may also have to invest in some supplies like paint, sand paper, stain etc… Giving life to old pieces of furniture is also a nice way to reuse things that might have been thrown away. This is a great option if you have a space to work in like a garage or a backyard and you can make a good profit by selling the updated furniture.

A side hustle that may not require an upfront investment:

6. Junk hauling/moving service

Do you own a truck? You can offer services to haul away junk. Perhaps you’ll find people who don’t have a truck or people who are not able to move their own junk. You can capitalize on that while also helping people.

You can also offer moving services. There are times when people need a truck but maybe they don’t want to rent a U-Haul. Also, if someone needs to buy a big piece of furniture but has no way to get it home you can help with that as well. Big box stores often offer delivery services but at a hefty price. You can offer competitive rates to pick up and delivery large items in your area.

7. Become a wedding officiant

Do you like being in front of a crowd? Depending on the state you live in you can become a wedding officiant online in one day. Some states require extra steps like registering with the state registry but other states only require the online certificate. Research the requirements in your state and decide if this is something you would like to do on the weekends. This is a side hustle that can turn into a full-time job. The wedding industry is huge and everyone who gets married needs an officiant. The best part is most weddings take place on nights and weekends so you can do this while still maintaining another job.

8. Vehicle advertising

Do you have a car? Are you open to advertising on your personal vehicle in exchange for money? This is a great side hustle because it’s basically passive income. You can check out Carvertise or Wrapify for more information. If you don’t mind driving around in a car with advertisements this is definitely something to look into.

9. Makeup/ Hairstyling services

Now, you can go to school to learn to do makeup and hair and that is a great profession. However, if you’re naturally talented or self-trained you can offer your services to people who maybe don’t want to pay the high prices for salon services. A great way to get yourself out there is to post your clients on social media that way people can see your talent. This side hustle can generate a lot of income if you’re able to squeeze in multiple clients per day.

10. Rent out a spare room, garage space or parking space.

Have you ever considered rental income as a side hustle? If you have an extra space that someone else could use you should consider renting it out. This doesn’t have to be a long-term commitment. If you’re looking to make some extra money for a wedding or a big vacation you can rent out a space for 6 months or a year just to make some extra money.

11. Offer services to your neighbors

There are so many services that people are willing to pay for. Put up some flyers or find a neighborhood Facebook group and offer services such as dog walking, babysitting, cleaning houses, car washes or shuttle services. These services are always in demand.

There are also websites like task rabbit that allow you to connect with people to do specific tasks for them. If you know how to build furniture, hang lights or other general handyman tasks you can look into task rabbit or promote your services on craigslist or social media.

Now let’s talk about utilizing the internet and social media for a side hustle:

12. Create and sell E-products/ printabes or E-services

Are you an expert in a specific area? Create an E-book that teaches the reader how to become an expert like you. This can be anything from “Learn the basics of cooking” to “How to do well on a job interview.” Use Canva to create your E-book then sell it to anyone who might want to learn about that topic.

Create an online course. If your area of expertise is best shown through video, create a video series. You can sell access to your videos or use Skillshare to get your videos out there.

Create and sell digital products. Again, you can use Cavna for this. Create templates, calendars, info packets etc… There is no limit to the amount of digital products that you can create and sell.

If you’re good with technology, graphic design, coding or other technological services check out Fiverr. It’s a great way to get your services out there for people to see. There are so many people that struggle with technology. You can make money by helping people with their digital needs.

13. Sell new or gently used items online

Do you have kids who are always growing out of their clothes? Or do you tend to buy things that only get used a few times and just take up space? Try selling these items on Ebay, Craigslist or Facebook marketplace. People are always looking for a bargain and second hand items are a great option. Selling your items online is a great way to clear out space in your home and make some extra money.

14. Tutor or teach online

Are you a dancer or a fitness instructor? Do you know how to speak more than one language? Are you able to tutor students? Offer classes via Skype or Zoom. This is a great option because you can socially distance while still teaching and interacting with others.

15. Get paid to take online surveys

You can get paid just for giving your opinions online. It’s not a joke. Online surveys really do pay. Some websites you can check out for this are Swagbucks, Opinion Outpost, Pinecone Research, Survey Junkie and Inbox Dollars.

16. Freelance writing

Are you a talented writer? You can get paid to write online. You can write guests posts for blogs or online articles. Check out Medium, Best Pickest, Dollar Stretchr, Money Pantry and Freelance mom for some opportunities.

17. Affiliate Marketing

Do you have a large social media following or the protentional to create a large following. You can make some serious money with affiliate marketing. This is a great option if you understand the social media algorithms. If you’re consistent and you continue to grow your following you can create a good income stream for yourself.

18. Manage social media for a company

Are you good with social media? Do you understand the algorithm or know how to engage well with people online? Then you should look for opportunities to manage a social media account for a brand or company. Social media is so important to a company’s image. Often times companies want to hire an outside source to manage their accounts. This is a great option and it’s something that you can potentially do from home in your spare time.

logos for YouTube, Facebook, WordPress, zoom, canvas, Instagram. eBay and skype

A side hustle job with long-term goals and no immediate gain:

19. Blog

You can start a blog pretty easily and for very little upfront cost but it won’t make you money right away. In fact, it may take years of consistent hard work to start earning some money. That being said, it could be worth it. If you’re willing to put in the time and be consistent then you can potentially create a huge income source for yourself. There are numerous ways to monetize your blog.

20. YouTube

Similar to blogging you can start a YouTube channel for little or no money but you won’t make money at first. It could take years before your channel becomes monetized but once it is monetized there is no limit to the amount of money you can make. Consistency is the key with YouTube. You have to show up, create content and build an audience. Putting in the work now might be a great investment into your future.

21. Invest

Speaking of investing in your future, invest some money now. This probably doesn’t seem like a side hustle but hear me out. Investing now, the younger you are the better, is a great way to create wealth for your future self. Meet with a financial advisor and invest what you can. You’ll be surprised that even a small amount of money, invested over a long period of time, can become a huge sum of money. A side hustle is a way to create more income for yourself. Why not make investing in the stock market yours? If you make investing your side hustle your future self will thank you.

Make your money make you money written in white

Now that’s a lot of side hustles…

Did you find a side hustle on this list that you would consider doing? As I mentioned before diversifying your income is a smart idea. Don’t rely on one source of income. Give yourself multiple income streams so you’ll never be without a source of income.

I hope this was helpful. My biggest tip when looking to earn extra money with a side hustle is invest in yourself. You may have to spend some money to get your side hustle going but it could be worth it. If you decide to become a content creator all the months of unpaid work might be worth it in the end. If you decide to sell your services you can offer free or discounted services at the beginning to get your side hustle going but once it takes off make sure to charge what you are worth.

To create a profitable side hustle find something you’re good at and monetize it. You also have to put yourself out there to make money. Harness the power of social media to promote your services. It might take a little work at first but remember happy customers bring more happy customers. So, once again, invest in yourself… and in the stock market. You’ll thank me one day.

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How To Improve Your Credit Score and What To Avoid

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Are you wondering how to improve your credit score? Do you know why your score is so low? In this post I will outline what a good credit score is, how to improve your credit score and things to avoid when trying to improve your credit score.

Credit score, poor, fair, good, very good and excellent with a check mark next to good

First let me explain how credit scores are rated. Credit scores range from 300 to 850. Generally, this is how the scores are rated:

SCORE RATING
300-579 Poor
580-669 Fair
670-739 Good
740-799 Very Good
800-850 Excellent
Table of Credit Score Ratings

The most important thing to know when you are trying to improve your credit score is that it will take time. Don’t get caught up in the process and focus on the long-term goal.

You should never pay to get your credit score. You can get a free credit score at creditkarma.com. Once you know your credit score you will need to review your credit report. You can get a free credit report from annualcreditreport.com. Review every entry on your credit report and make sure that they are correct. If there are any discrepancies be sure to contact the agency responsible and dispute the errors.

How to increase your credit score:

  1. Pay your bills on time. Even one late payment can have a negative affect on your score.
  2. Pay more than the minimum payment. This will help you pay down your debt faster and you will pay less in interest.
  3. Have a diverse credit profile. Having different types of open credit will help raise your score. For instance, having a personal loan, a car loan, a credit card and a mortgage is better and more diverse than just having 4 credit cards.
  4. Pay off cards completely before the month closes out. You can call and ask what day of the month your credit card company reports to the credit bureaus. Be sure to pay your card before that day so they will report a lower balance or a zero balance for your card if you’re paying it off.
  5. If you don’t have any credit or only have 1 or 2 items on your credit report you may need to open more in order to improve your credit score. Opening new lines of credit or loans may temporarily decrease your score but it will benefit you in the long run if you follow these steps and continue to be responsible.
its not as simple as just making on time payments. make your credit card work for you to increase your credit score written in black on white square with credit cards and keyboard in background

How I continue to raise my score

A trick that I use to raise my credit score is paying off a credit card completely every single month. I use my bank credit card to pay my gas bill every single month. It’s around $60 and my card limit is $500 so I am using less than 30% of the limit. Every month on the 9th my gas bill is charged to that card and every month on the 9th I make a payment to that credit card for the entire gas bill amount. The gas bill is the only charge I put on that credit card.

So, every month the card gets used and every month it gets paid off completely. Doing this for several months in a row will greatly increase your credit score. Just be sure that you are using less than 30 % of the card limit and it will reflect positively on your credit report.

Things to avoid:

  1. Do not max out your credit cards. In fact, don’t use more than 30% of your credit card limit. So, for example, if your limit is $1000 you do not want to charge more than $300 to that card.
  2. Do not close out credit cards. Length of credit history is important so you should keep all cards open, even if they have a zero balance. Some companies will close your line of credit after a period of inactivity but that will not affect you negatively so keep all cards open.
  3. Do not pay for credit repair services. These companies claim to help improve your credit score and “repair your credit” but that’s just not the case. Anything these companies do you can do yourself. If you are in collections or have bad credit you can contact the collections agencies yourself and start to repair your own credit. Just remember that it will take time.
  4. Do not pay collections until you have an agreement from the collection agency, in writing, stating that they will remove the debt from your credit report. I go more in-depth on this in my credit score video linked HERE.

A word of advice

One important thing to know is that medical debt has far less of an impact on your credit that credit cards and loans. If you are struggling with unpaid debt and collections you should first focus on the other debt before the medical debt. If you are struggling and unable to pay your minimum payments the first thing you should do is call the debt collector. Whether that be the credit card company, bank or whoever you make your payments to. Call them and inform them of the situation and see if they have any programs or special payment plans that they can offer you.

It’s best to speak directly with the payment collector and together you might be able to come up with a temporary solution to help you during your hardship. It is worth a try if you’re not able to keep up with your minimum payments.

If you are trying to improve your credit score and you don’t know where to start here are some resources that might help you

  1. ExperianBoost. This is a free service offered by Experian, one of the 3 credit bureaus. Make an online account and Experian will review to your bank account to see if there are any monthly bills that can help “boost” your credit score. It’s almost instantanious and it really works. It raised my score by 14 points in minutes. You can check out ExperianBoost here.
  2. Get a secured credit card through your bank or credit union. For a secured card you pay the card limit up front, as a security deposit, just in case you don’t pay your bill. So, if you get approved for a secured card with a $300 limit, you will give your bank $300 from your checking or savings account. After about 6 months of paying your bill on time the credit card will become unsecured and you will get your security deposit back. It’s a great way to get a credit card and start improving your credit score.
  3. Become an authorized user on someone’s account who has good credit. Just be sure that you’re responsible enough to make on-time payments so you don’t decrease both of your scores.
  4. You can apply for an amazon credit builder account. It works very similarly to a secured credit card. You can apply here.

Want to improve your score and save some money?

I saved the best for last. Apply for a credit builder loan with Self Inc. This is a “loan” that you make payments to each month solely for the purpose of increasing your credit score. Once the “loan” is paid off you will get to keep the money that you paid into that loan. Essentially it’s like a savings account that you are paying into but you have specified terms for payments, like you would for a loan. Your payments will be reported to the credit bureaus so continuous on-time payments will help boost your score. It’s a really cool idea and if you are interested you can check out the details here.

I know this was a lot of information to digest. Please reach out in the comments if you have any questions

One last note. A credit score of 680 is typically good enough to get approved for most loans and credit cards. Once your credit score reaches 740 you will typically be eligible to the best interest rates. So those are the 2 credit scores to aim for on your journey to raise your score.

I hope this was helpful. If you enjoyed it please share this post to Pinterest. If you have any credit related stories I would love to hear about them in the comments. I do plan on making more posts about credit and credit cards in the future so I would love for you to leave some questions or reach out to me on Instagram. Thank you for stopping by!

Green background with 4 green check marks. www.imperfectashly.com. Do you need to improve your credit score?
https://youtu.be/MXJxxLjged4

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