Tips for Better Credit and Smarter Spending

“Tough times never last, but tough people do.”  - Dr. Robert Schuller

Author: Janet I. Behm. Nate Hagerty, Grammarly, and Copilot

Revised from a 2021 Blog titled: Mending Your Spending for Better Credit

A 5-MINUTE READ

• TAX DEADLINE FOR EXTENSIONS

• FOURTH QUARTER TAX PLANNING

• KNOW THE SCORE

• MISTAKES DO HAPPEN

• WHERE YOUR BUCKS WILL DO GOOD

• EASE THE PRESSURE FROM CREDITORS

• MISTAKES DO HAPPEN

• STAYING THE COURSE

TAX DEADLINE FOR EXTENSIONS

We’re nearing the end of "extension season" around here at Utah Real Estate Accountants ... and it's been a doozy.

With so many changes thrown at us, word on the tax professional street is that there are going to be a lot of very tired and very grateful CPAs and tax pros after October 15th.

The above deadline is for tax returns that have an extended filing date, so consider this to be your reminder that if your tax pro is waiting on documents from you, they need them!

Fortunately, with the kind of clients we have, we've managed to weather these storms more effectively than many of our colleagues around the country. So -- THANK YOU!

FOURTH QUARTER TAX PLANNING

It's also that time of year when you start having conversations with your tax pro about the final quarter of the year. If there are things you can do now to ensure your 2025 tax bill doesn't increase, or even goes down, there might be some simple tweaks we can make. This proactive approach puts you in the driver's seat, allowing you to make informed decisions and take control of your financial future.

Your new mortgage company sticks you with high interest. The best credit cards are out of your reach. You've finally found the perfect new car, but your loan application comes back with a big fat "DENIED." None of these are situations anyone wants to find themselves in.

Feeling like you have the plague when it comes to people lending you money or trusting you to pay your bills is really frustrating (just like your credit).

But, you CAN fix it… If you start putting time and money into the proper uses, you can turn your financial situation around. With the right strategies and a bit of patience, you can improve your credit score and regain control of your financial health.

KNOW THE SCORE

First, do not jump to use a credit repair company. Many of these tasks are free if you do them yourself. Save your money, at least initially, in your repair process. You’re going to need it.

Second, don’t beat yourself up. Perhaps in the past, you overspent or didn’t pay bills on time. You’re not alone: More than three out of five American adults say they carried credit card debt within the last 12 months – and more than one in four admit they don’t pay all their bills on time. These struggles are more common than you might think, and it's okay to seek help and guidance.

Figure out where you went wrong later – the boat’s leaking, and now is the time to bail out and patch the hole.

The clearest indicator that your credit has sunk is your credit score. One commonly used credit-scoring model is the FICO score, courtesy of a California credit-score software company started decades ago as Fair Isaac Corporation.

Scores are generally between 300 and 850. Guess which number you want to be closer to ...

Your score is kept by the credit bureaus Equifax, Experian, and TransUnion (there are others, but those are the big three) and provided to those who make decisions about lending to you.

A lot of past money mistakes can ding your credit score: spotty bill paying, bankruptcy, using too much of your available credit, or even having too much of just one kind of credit (only cards, for instance, or having no long-time bill outside of a mortgage), to name a very few.

Most American adults have a “good” score topping 700 – but in the end, lenders decide what score works for them. Sounds unfair. Not to mention the fact that some West Coast software company you've never heard of gets to decide whether you get financing for that new car or even pass muster for a new job.

Yeah, it’s unfair, but right now the name of the game is "bail and patch."

WHERE YOUR BUCKS WILL DO GOOD

I’m afraid the best advice isn’t easy to hear and is even harder to do. To start, pay your bills on time. Payment history makes up more than a third of your FICO score. On-time payments are the best way to start building your credit score.

Then …

• >Pay down debt. For recurring bills, try to use auto-pay (make sure you have the cash deposited to cover them). Next, attack the high-interest stuff – and Do It, Do It, Do It--pay more than just the monthly minimum on credit cards. That minimum is a revolving credit trap.

• >Remember all those problems that can hurt your score? Address them. One of these problems is your credit utilization ratio, which is how much credit you have versus how much you use. If you're using a large portion of your available credit, it can negatively impact your score. To improve this ratio, try to reduce your credit limit usage. And stop applying for new credit for a while – these applications create what are called hard inquiries, and too many of them hurt your score. When you get the balance to ZERO, keep the account open. It is now a good account (think paying off: refinances and loans). 

EASE THE PRESSURE FROM CREDITORS

• If you’ve got scads of people hounding you for money you owe, try a debt consolidation loan. You might get lower interest rates and easier monthly payments – but you’ll have to qualify and stick to the terms.

• You can also get a balance-transfer card with a low (even zero) interest rate. If you receive one of these cards, please do not continue charging on the original card.

• Look into a good credit-counseling agency. Look for a non-profit one with free initial consultations. Try the National Foundation for Credit Counseling.

• And this can be huge: Double-check your credit report.

MISTAKES DO HAPPEN

Believe it or not, credit bureaus are only ‘human.’ Something in your report might actually be wrong. Fix that fast.

You can request a free copy of your credit report from each of the three bureaus once every 12 months at AnnualCreditReport.com, and right now, the big three continue to offer free online weekly reports. Experian will give you your FICO score for free, too.

Looking over your report, watch for mistakes in the “derogatory marks” in your history (funny thing how if there are mistakes, they’re usually not in your favor…). You’ll see some of those “dings” we talked about earlier.

If you see something wrong, file a dispute with the bureau. Just know going in that they’ll only remove facts that are plainly inaccurate or old.

STAYING THE COURSE

Take the necessary steps to improve your credit score above 700. At that point, you have experience with the system and can make rapid progress by staying the course.

We’re here through these weekly blog posts, supporting your wealth creation.

BE THE ROAR not the echo®

Warmly, Janet, the Tax Wizard