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Good Credit is the Key to Hitting Your 2023 New Year's Resolution

Good Credit is the Key to Hitting Your 2023 New Year's Resolution

Whether it’s cutting bad habits, getting in shape, or saving more money, the start of a new year is the perfect opportunity to wipe the slate clean and start fresh. Every year two-thirds of Americans jot down a New Year’s resolution to improve their financial wellness—are you one of them? If so, this article is just for you.

“Financial wellness starts with one thing—good credit,” says Sandra Bouten, Branch Manager at The Bank of Elk River. “It is incredibly important to start building credit early, and to create and maintain good credit habits to ensure a healthy credit score follows you through life.”

So, how exactly do you create and maintain good credit? The Bank of Elk River and the Independent Community Bankers of America (ICBA) have teamed up to provide you with the following tips:

  1. Open a checking account and keep careful track of your balance to help establish a credit history.
  2. Use debit and credit cards to help track your purchases, but be careful to spend your money wisely and avoid missed or late payments, which can damage your credit.
  3. Develop a good mix of credit (such as a revolving credit line and an installment loan) to boost your credit score and demonstrate that you can manage different types of credit.
  4. Show stability in the three to six months before a major purchase. Avoid opening or closing accounts or moving large amounts of money around.
  5. Open a savings account to build an emergency fund equal to at least six months of living expenses. This will establish a financial cushion to help absorb unexpected expenses and avoid penalties and fees for missed or late payments.
  6. Alter your credit focus as you approach different life stages. While Gen Z might be saving for a down payment, Gen Xers or baby boomers may be paying down debt to plan for retirement.
  7. Monitor your credit regularly so you can correct any errors and detect potential signs of identity theft. There are several websites that provide free credit reports such as annualcreditreport.com, or you may be able to obtain your credit report for free from one of your credit card companies.

Not only will establishing good spending and saving habits help you more quickly recover from temporary financial roadblocks, but a good credit score will often provide you access to better terms and interest rates that ultimately save you money and improve your financial well-being.

Cheers to 2023 and your financial future looking bright!

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