You may have a friend in mind who seems to have everything figured out from a financial standpoint -- they have little to no debt and seem to be completely in charge of their financial security. They're fiscally responsible, have a well-organized financial life and maintain a high FICO score. How do they do it?
They Keep Their Credit Score Healthy
Your FICO score determines how and when you can borrow money, but it can also serve as a barometer for your overall financial health. If you're struggling to make ends meet, concerns about your credit score take a backseat to keeping the lights on or food in the pantry. At the same time, even if your income is more than sufficient to meet your needs, irresponsible spending or neglect can cause your FICO score to suffer. Successful people keep their credit score healthy by actively working to maintain their financial well-being.
They Take Charge of Their Credit
Don't needlessly damage your score by making late payments simply because you're not tuned in to your expenses. Also, make sure you know your credit score and are familiar with your own credit history by obtaining a credit report. You can't maintain or repair a FICO score if you pretend it doesn't exist.
They Forget About Appearances
One trait most financially successful people share is a desire to accrue or maintain wealth, not a desire to simply appear wealthy. The old adage about "keeping up with the Joneses" might make you look good at the next neighborhood gathering, but your credit score will suffer when you overextend yourself for the sake of appearances.
They Set Financial Goals
While the overall goal may ultimately be to establish and maintain a good credit score, it's important to set concrete financial goals. Decide if you'd like to refinance your home, then work to maintain your credit score in order to achieve that goal. Rather than seeing your FICO score as an end goal in itself, consider your credit score a means of meeting your more tangible aspirations.
One of the most important and influential habits of financially successful people is that most are always working to gain more knowledge and a greater understanding of not only their own finances, but also the overall financial landscape. Take time to review your credit report and set goals, research how your FICO score can be affected, and understand what determines a great credit score.