The Complete Guide To Repairing and Boosting Your Credit Score: 45+ Tips for Building a Strong Financial Future

On occasion, using credit as a source of funding is necessary. Whether that’s to manage bills better or to allow you to spread the cost of a sudden large expense, credit can make life a bit easier. When used correctly, having access to credit can expand your spending power and allow you to purchase items without being restrained by payday. However, small mistakes can mean that you quickly find yourself in the frustrating position of having restricted credit, thanks to a low credit score. 

Your credit score is a key indicator of how risky you are to lenders and creditors considering offering you a loan or line of credit. Because these entities don’t know you personally, all they have to go on is a review of your previous payment history and other related behavior. Additionally, when you start on your credit journey, you’ll need to prove your trustworthiness before you can borrow more money.

FICO is the most commonly used credit score, so that’s what we will focus on here. Your FICO credit score will typically fall between 300 and 850 based on your credit history. Anything above 750 is considered excellent credit, but a score of 600 or below makes you a poor credit risk.

If your credit score isn’t where you would like it to be, the good news is that there are some things that you can do to improve it. By implementing these strategies, you can reap benefits, including lower interest rates on loans and the ability to secure higher credit card limits. Additionally, there are some steps you can take to improve your approach to your finances more generally. This guide looks at both aspects, providing actionable advice to help you build a strong financial future.

Tips for Improving Your Credit Score

1. Understand How a FICO Score Is Calculated

To improve your credit score, you’ll need to understand how it’s generated in the first place. Unfortunately, there’s no hard and fast rule about how a FICO score is calculated. There are multiple ways of scoring, which is why you might find your score varies slightly from company to company. 

However, 5 main categories are considered, with each accounting for a certain percentage of your score. These are:

This information can help you understand which changes will make the most difference when trying to improve your credit score.

2. Understand Which Payments Impact Your Credit Report

Your credit score is used as a general indicator of your creditworthiness, but did you know it doesn’t actually take into account your full financial history? Not every bill is reported to the credit bureaus; therefore, not every bill counts toward your score. This can be good if you struggle with managing your money, but if you’re a responsible spender or are simply trying to improve your credit score, knowing that some major bills are excluded can be frustrating.

For example, rent payments, insurance bills, utility bills like gas and water, cell phone contracts, and other digital services like streaming subscriptions aren’t included. This can make it difficult for people who can’t afford a mortgage (which is rising, given the cost of living) to improve their score – but it’s not impossible. 

3. Pay Your Bills on Time

One of the best ways that you can improve your credit score is by paying your bills on time. In fact, payment history is one of the primary categories reviewed by the credit card bureaus when determining your credit score and accounts for 35% of your total number.

Payments that are delinquent (even if only by a few days) can have a negative impact on your credit score. It can be beneficial to set reminders if you have trouble remembering which bills are due and when. Setting these prompts makes you much more likely to pay bills on time and avoid the negative impact on your credit report. 

4. Pay More Than the Minimum

Paying more than you owe each month on your outstanding debt balance can have multiple benefits, reducing your overall debt load and helping you to pay off balances faster.

If you have more than 1 debt balance (such as several different credit cards), making more substantial payments on 1 account while continuing to make at least the minimum payments on the others can help you focus on reducing these balances 1 at a time.

Once you have fully paid off a balance, you can then focus on another, and so on, until you’ve fully paid off all of your debts.

5. Be Aware of Your Credit Utilization Rate

One of the other significant factors in determining your credit score is the amount of money that you owe compared to the amount of total credit available, known as your credit utilization rate. 

It’s actually best if you aren’t at or near your overall credit limit on your cards. Lenders and creditors pay close attention to this – borrowers with a high utilization rate are, on average, less likely to pay back what they have borrowed. Alternatively, someone with a low credit utilization rate will likely have a higher credit score, as they’re probably better at keeping on top of their finances.

The ideal utilization rate is around 30% or lower for each individual account and, in total, across all accounts. 

Hot Tip:

The amount owed on different types of accounts can also make a difference. For example, it is better to owe $50,000 on a mortgage than $50,000 on a credit card account. A mortgage is considered “good debt,” whereas unmanaged credit card use is considered “bad debt.”

6. Ask for a Credit Increase If You’re Able To Manage It

If you’re finding that you tend to be close to your utilization rate each month, it can be worth considering raising your credit limit. If you’re a responsible borrower, chances are that lenders have already offered you a higher limit, but you may have declined so far as you don’t need that much money. 

Whether you actually use that limit or not, raising it can help keep your utilization in check and around the recommended 30% rate. However, it is important to only do this if you’re sure the higher amount wouldn’t lead to increased or uncontrolled spending.

7. Check for (And Remove) Any Incorrect Information on Your Credit Report

Ensuring your credit report is accurate and up-to-date is one of the best steps to boost your credit score. By flagging and removing inaccurate information, you can ensure it isn’t giving a negative picture of your financial situation to lenders and, therefore, lowering your credit score.

There are several ways to obtain your credit report, including online services offering credit monitoring and identity theft protection. Be careful when seeking a copy of your credit report, as you can get lured into paying for services you don’t want or need.

Every year, consumers are entitled to at least 1 free copy of their credit report from each of the 3 major credit bureaus. When you receive your credit report, you should read it carefully to ensure that all the details are correct. If you find any inaccurate information, report it to the credit bureau immediately to have it removed from your credit report. Otherwise, it may continue to harm your credit score, along with your chances of obtaining future credit.

8. Reduce Your Debt-to-Income Ratio

Your debt-to-income ratio, or DTI, is a personal finance measure that compares your monthly debt payment to your overall income. It is one way that lenders measure your ability to manage monthly income and repay debts. DTI is determined by dividing your total recurring monthly debt (such as a mortgage, auto loan, and credit cards) by your gross monthly income.

If you have a low debt-to-income ratio, lenders and creditors see that you have a good balance between the debt you carry and the income you earn. On the other hand, a higher debt-to-income ratio can be a sign that you have more debt than you can support with your income. It makes you a higher lending risk. As a result, paying down debts can reduce your debt-to-income ratio and positively impact your credit score.

9. Have a Good Mix of Debt

A balanced mix of debt can be better for your credit score than having all of your debt in a single category. Based on information from FICO, consumers with a mix of credit types on their credit report tend to be less risky than those with only 1 type of credit, as they’re better able to balance their debt payments across multiple providers.

There are many different types of credit, including:

• Mortgage loans
• Bank credit cards
• Installment loans (such as vehicle loans and student loans)
• Retail and gas station credit cards

The types of credit you have used will account for 10% of your total credit score. 

10. Keep Your Credit Cards, Even if You’re Not Currently Using Them

Your credit history factors into the strength of your credit score. This factor will average the ages of your loans, credit cards, and other lines of credit.

A long credit history offers a lender more information to assess your creditworthiness. It can also be an indicator that you have successfully been able to obtain and manage credit for an extended period.

Keeping credit card accounts open, even if you’re not using them, can be a good strategy for retaining a long credit history. If you cancel old credit cards, you could shorten your credit history and hurt your credit score. However, it may not be a good idea from a personal financial perspective to keep a credit card open if it has an annual fee and you’re not using it.

11. Incorporate a Credit Card Into Your Regular Financial Rotation

If you don’t have a credit card at all, it can be well worth considering getting one. Understandably, some people can feel nervous about having a card that allows them to spend money they don’t have in their account. There are a small number of individuals for whom a credit card won’t be a good choice – if you struggle with impulse spending, for example.

However, it’s good to remember that having a credit card doesn’t mean that you have to spend money before it lands in your account. You could say that you’ll only use your card to pay for specific expenses, such as grocery shopping or fueling your vehicle, and set up an automatic payment from your current account to your credit card for the full amount when it’s due. This way, you’ll benefit from showing lenders that you can responsibly manage your money without feeling out of control – you’ll never be spending money you don’t have.

It’s important to remember that opening a new card will impact your credit score (this factor is worth 10% of your FICO score), but it can pay off in the long run when used correctly.

12. Don’t Apply for an Abundance of New Credit

You should be careful about applying for lots of new credit, especially if you don’t need it. Each time you apply for a new credit account, lenders pull a hard credit inquiry. Too many hard credit inquiries can hurt your credit score, particularly if the inquiries occur within a short period.

You only need 1 credit card to boost your credit score, but successfully managing 2 or 3 can really demonstrate your financial abilities. While there’s no limit to the number of credit cards you can have, you’ll want to be wary of the risks associated – racking up fees, an increased risk of fraud, and the temptation to spend far more than you’ll ever manage to pay off. Ultimately, the right number of credit cards for you is an individual decision.

13. Understand the Difference Between a Hard and Soft Credit Inquiry

Understanding the difference between a hard credit inquiry and a soft credit inquiry can help you avoid accidentally changing your credit score. Hard credit inquiries can occur when you apply for the following types of loans or credit:

• Auto loan
• Business loan
• Credit card
• Mortgage
• Personal loan
• Student loan

Conversely, soft credit inquiries (which will not negatively affect your credit score) can include:

• Background checks for employment
• Background checks for renting an apartment
• Credit prequalification

Despite not affecting your credit score, it’s good to know that a soft credit inquiry can be made without your permission.

14. Become an Authorized User

Becoming an authorized user on someone else’s credit card account can improve your credit score. When you are an authorized user of a credit account, the account’s payment history appears on your credit report. If that payment history is positive, this could raise your credit score.

However, this strategy can backfire if the account holder doesn’t pay their bills on time. If the primary account holder does not make timely payments, these late payments will not only go on their credit report but also on yours.

Additionally, you will want to ensure that the cardholder you partner with does not have a high credit utilization ratio.

15. Know Exactly Where You Stand

Knowing your credit score can help you make smarter overall financial decisions, such as choosing credit products to help you build or rebuild credit. It can also help you to keep your credit score in a higher range as you monitor your credit report for inaccuracies.

Being mindful of your credit score can allow you to predict more accurately whether or not a loan or a credit application will be approved and whether you will qualify for a lower interest rate when you borrow.

16. Set up Automatic Payments

Modern life is busy. And with so many things going on, it’s easy to forget to pay your bills on time, especially if you’re juggling multiple forms of credit. However, missing a payment can have a big impact on your credit score and incur extra fees that increase your total debt. In extreme cases, when your late payments result in you defaulting on your debts, these infractions will stay on your report and affect your credit score for 6 years. 

So, to avoid this, setting up automatic payments from your current account out to your loans can be beneficial. Assuming you’ll have the money in your account by the date you set the payment for (and therefore won’t go into your overdraft), automatic payments, even if they’re set for the minimum amount, are a great way to reduce the risk of missing important deadlines.

17. Don’t Put Missed Payments off Further

If you do accidentally miss a payment, don’t panic. It takes about 30 days for missed payments to show on your credit report, so you have a chance to speak to your lender and see if anything can be done. Ideally, you would just make up the missed payment right away, and in this case, the lender might not report it to the credit bureau, meaning it won’t show up on your report and affect your score. 

Hot Tip:

If you missed the payment or a direct debit bounced because of a lack of funds, it’s still best to call the lender. You might be able to agree on a payment plan together that allows you to pay in smaller installments. It can be scary to face your debts, but putting them off will only see them grow.

18. Get a Secured Credit Card

If you’re struggling to build your score because you can’t get accepted for a standard credit card, you may want to consider getting a secured credit card instead. Unlike a regular credit card, where you simply apply, get approved, and can go ahead and start spending, a secured credit card requires you to give a refundable security deposit to the issuer when you open the account. They’ll then hold onto this money to be used in case you don’t pay your bill, therefore reducing the risk level for them. As a result, many people who can’t get accepted for a standard credit card will be able to have one of these instead.

These deposits vary between issuers but typically are at least $200. Usually, the size of the deposit will directly correspond to the size of the credit limit you’re then given. 

19. Consider a Credit-Builder Loan

If you’re a strong saver but don’t have a good credit score because you don’t want to use a credit card, a credit-builder loan could be a good option. You agree on an amount with the lender – for example, $1,000 – which the company then places into an account in your name. You then make monthly payments into this account over an agreed term up to the $1,000, at which point you’ll receive the money and any dividends you’re eligible for. 

While this might feel like the wrong way around in comparison to a standard loan, it’s a great way of demonstrating your ability to make monthly payments on time without the risk of a credit card. 

If you’re already putting money into savings for a long-term goal (and therefore, you won’t need access to the money before then), having one of these loans in place can give you the benefit of a boosted credit score for something you’d already be doing.

20. Consider Experian Boost

If you don’t have a credit card, a mortgage, a car loan, or another type of bill that counts toward your credit score, you may want to consider applying for Experian Boost. Experian is one of the main credit bureaus, and this free feature allows you to apply to have 2 years of “regular” bills added to your credit report with the aim of boosting your score. These might be phone bills, rent, internet or cable bills, or utilities – if you’re regularly paying them, this can demonstrate to creditors that you are a trustworthy lender.

Experian Boost also provides a wider range of ways to improve your score, and it ignores late payments. So, while you’ll still want to try and make sure you’re paying on time to build up a clear pattern of regular payments on your report, if you miss 1 by mistake, you won’t pay the consequences on your credit file. Experian estimates that Experian Boost will boost the average person’s FICO score by 13 points.

21. Consider UltraFICO

It can be frustrating to have a poor credit score despite having plenty of money in your current and checking accounts. Many people use their debit card as their primary spending tool, but without a credit card, it can be more difficult to build up a good credit score. 

The UltraFICO score, in comparison to the standard FICO option, looks at your wider accounts, including the length of time they’ve been open, the frequency of your transactions, savings, and positive account balances. 

FICO estimates that:

• 15 million people in the U.S. will be eligible for an UltraFICO score, even if they can’t get a standard score
• The UltraFICO score will generate a higher score for 7 out of 10 people

So, if you primarily rely on standard debit and checking accounts, it could be worth investigating. However, it is important to note that you do have to apply for credit and get rejected before you’re able to ask the lender to run the check using UltraFico.

22. Deal With Debt in Collections

Having debt in collections means you’ve missed multiple payments, and now the company has arranged for debt collectors to chase up on these missing funds. This can be a difficult time, and it’s tempting to try and bury your head in the sand. But it’s really important to get these debts paid off as soon as possible to minimize the impact on your credit report.

A collection account will remain on your credit report for up to 7 years, but paying it off will reduce the balance to 0. This means that while you will likely still see the negative repercussions of this on your report, a zero balance when you apply for new credit products looks much better than debt still owed. Note that your report can take a few months to update, so be aware of this if you are applying for new credit products.

23. Consider Cosigning if You Need To

If you’re struggling to get accepted for a car loan or similar because of your credit history, you could consider applying with a cosigner who has a better credit score than you. The debt will appear on both of your credit reports, so assuming everything is paid on time, this can be a positive for both parties. 

However, remember that co-signing with someone shouldn’t be taken lightly. Even if it’s intended to help you, if there are any late payments, it will affect you both, so only proceed with someone you trust.

Building a Strong Financial Future

Now that we’ve discussed specific tips for boosting your credit score, it’s time to look at how you can improve your relationship with your finances more generally. Money can be an emotional topic, but by taking control, you can better shape its influence on your day-to-day life and relationships.

24. Know How To Handle Large Amounts of Debt

When you’ve got multiple sources of debt or 1 big loan, things can feel overwhelming. You may feel like you’ll never be able to pay it off or spend your time worrying about missing payment deadlines. Additionally, finances can often be complicated, with extra things to consider, like fees, interest rates, and tax.

Getting organized and writing things down in a clear way can help you get a handle on your debt and feel more in control. To start, make a list of every debt that you owe, no matter how small – who you owe it to, how much, and when it’s due, as well as any payments you’re already making. Next, put these debts in order of importance. While it’s true that they all need to be paid, you’re more likely to be able to get flexible terms on something like credit card debt as opposed to a mortgage. 

Once you’ve understood your debt, you can start to plan how you’ll handle it, seeking independent advice if needed. It can help to have everything written down so that you have 1 master list to refer back to – this will also make it easier for any professionals who are trying to help you.

25. Consolidate Your Debt To Help You Tackle It – If You Can Keep On Top of It

If you’ve got debt in multiple places – for example, several different credit cards – it can be overwhelming to keep on top of everything. You may find that you miss payments just because you can’t keep track, or you’re paying fees on every account and watching the amount of money you owe creep up thanks to interest rates.

One option to consider is consolidating your debt by using a debt consolidation loan. This essentially means that the bank pays off your debts, and then you owe them the sum total – but on 1 larger loan rather than lots of smaller ones. Not only is this less to keep track of, but you may benefit from a lower interest rate, reducing the amount you owe overall compared to keeping the debts with individual providers. Furthermore, you may be able to pay your debt off more quickly, boosting your credit score.

However, it’s important to consider if this is the right choice for you. You may have to make a larger monthly payment than you do currently, so if you’re close to the limit you can afford, this might not be suitable. You’d also need to research to find out if the interest rate would actually be lower – if you currently have good rates, you might find that a debt consolidation loan potentially increases them.

 26. Pay off Your Balance Strategically

There are a few different ways to pay off your debt, assuming they are all the same type – for example, credit card balances. The main ones are:

• The debt snowball. This is where you list out your balances in size order and pay them from smallest to largest (but continue to make the minimum payment on the others regardless). FICO states that this method can be effective in reducing your utilization rate and removing balances from your credit report faster – both of which improve your credit score.
• The debt avalanche. A similar method to the debt snowball, but instead, you list your debts according to interest rate, highest to lowest. This can be effective, however experts suggest that it’s often not as motivating as the snowball method.

Taking this strategic approach to debt can help you feel in control and speed up the process of reducing it—or eliminating it altogether.

27. Keep Your Personal Information Secure

Unfortunately, the rise in our dependence on technology has meant that financial scams are increasing, too. Despite security advancements, there are more opportunities than ever for criminals to harvest your personal information, often without you even realizing it. If they succeed, they can run up large bills, impersonate you, or lock you out of your accounts. As well as causing you immediate financial difficulties, these fraudulent activities can also end up on your credit report, negatively impacting your score if you don’t notice and report them.

To avoid this, it’s crucial that you keep your personal information secure, including your bank details, email addresses, phone numbers, postal addresses, full name, and date of birth. Be careful who you give this information to, and be vigilant for phishing scams. Many criminals prey on people who are already vulnerable, such as those who are in debt. 

28. Set up Activity Alerts

Another way to reduce your chances of getting scammed is to set up activity alerts on your devices. That way, you’ll get notified by your bank every time you spend. If you detect fraud, you can take quick action to report it and stop it from impacting your credit report. 

Additionally, some people find activity alerts helpful for making themselves more aware of their spending habits. With contactless and phone payments making spending money incredibly easy, it can be difficult to resist buying things here and there, even if you don’t really need them. However, seeing the money leave your account can drive home the reality of your spending and help you make a change if it gets unhealthy.

29. Set up 2-Factor Authentication

In a combination of both of the previous points, setting up 2-factor authentication (2FA) for any spending can help keep your finances secure and allow you to ensure you’re really happy to go ahead with your purchases. 2FA makes it harder for scammers to access your accounts, even if they have your password. While it’s far from foolproof, it’s better to have it activated if you can – just make sure you remain vigilant and ensure you only approve access when you know you requested it.

Having this extra step in place can also give you the chance to ensure you want to go ahead with the purchase, reducing impulse spending. Especially if you have to enter a second password, rather than just using your biometrics, this can cause you to stop and think about what you’re doing. 

30. Try To Not Rely on Credit for Everyday Purchases

When you first get a credit card, a sense of novelty comes with not having to pay for something right away. It’s almost as if the item doesn’t cost anything at all, or simply just the $5 per month minimum payment on your account. And with so many more places accepting credit cards these days, it can be tempting to just put all your expenses through this method of payment.

While this can work – if you have it set up to automatically pay via standing order and you’re not spending more than you have in your current account – this can be an addictive habit. Without careful control, you can find yourself spending more than you can afford and becoming reliant on credit for everyday purchases.

31. Create a Household Budget

Whether you live alone, with a partner, or with friends, understanding how much you have to spend each month is key to ensuring you don’t exceed your limits and end up in debt. Most of us don’t have unlimited funds, so we have to balance our income and expenses – especially when living with others who might have a different attitude toward spending.

As a general rule, experts recommend allocating around 50% of your income toward necessities such as food, rent, and other bills, 30% toward hobbies, your social life, and non-essential expenses, and then putting the remaining 20% into a savings account or toward paying off debt. As we’ve discussed, if you have debts, paying them off should be high on your priority list.

Of course, these figures might have to change if you’ve got particularly high living expenses or debt. But once you can, try to move back toward these percentages to stabilize your finances. 

32. Track Your Spending

Once you’ve set your budget, you’ll need to ensure that you’re sticking to it. Some people like to track every expense, whereas others just like to have a general idea of where they are in relation to the limit they’ve set themselves – where you sit on this scale will likely come down to how much wiggle room you have in your figures. 

Tracking your spending sounds time-consuming, but thanks to modern technology, it doesn’t necessarily need to be. Many banks will allow you to categorize your spending and present you with a comprehensive graph or pie chart. You can also search by merchant to see how much you’ve spent on groceries, for example, if you always shop at the same store.

Bottom Line:

Tracking your expenses isn’t meant to make you feel guilty about your spending. In contrast, it’s meant to help you feel in control and give you a greater understanding of where you might be able to free up some cash.

33. Set Some Time Aside Each Month To Look at Your Finances

You may feel that your finances are better “out of sight, out of mind,” but looking at your bank accounts is a healthy, necessary part of being financially confident. Rather than waiting until things get bad to look at your statements, try to schedule some regular time to check in and ensure everything is in order. That way, you can quickly spot any issues, such as overspending in a certain area or, in contrast, having more “spare” money than you anticipated, allowing you to put more into savings that month. 

Hot Tip:

If you share finances with a partner or spouse, you should look at your own accounts and any joint funds you hold together. Reassess where you stand against your financial goals and talk about any big expenses you have coming up.

34. Use Technology To Help You Remember Your Bills

You don’t need to rely on your memory to help you pay your bills on time. We’re all busy, and it’s easy for things to slip the net, but, unfortunately, late payments have long-reaching consequences, such as negatively impacting your credit score.

On a basic level, you can input your bill due dates into your phone’s calendar, setting reminders for a week before to give you plenty of time to set up the payment. Or, if you’re confident that you’ll have the funds to do so, you can arrange a direct debit payment so that you don’t have to do anything manually at all. 

Hot Tip:

You can also get bill reminder apps that create a dashboard of upcoming payments and send notifications to your phone to prompt you to take action. Some budgeting apps will also have this function built in.

35. Have a Conversation With Your Spouse About How To Approach Debts

Having financial conversations with a loved one can be stressful, especially if the subject is particularly sensitive for one or both of you. Make sure to pick a time to discuss this where there’s no pressure, and be prepared to come back to the conversation another day if one of you needs a break.

If you’ve already got debt, you may feel embarrassed or defensive about it, which rarely goes hand-in-hand with open, relaxed communication. You should both try to be non-judgemental and approach your debt from a compassionate, practical point of view.

Additionally, you may want to talk to your spouse about hypothetical debt – how you’ll approach this issue if it arises. While it might feel odd to talk about something that hasn’t happened, having this conversation without the stress of debt looming over you can allow you to devise a plan that you’ll put into action should the situation arise.

36. Plan Big Expenses Ahead of Time

You can’t plan for everything in life. Sometimes, the boiler breaks, or your car needs a repair. However, there are some things you can plan for, such as vacations, and seasonal events, such as birthdays, Thanksgiving, and Christmas, where expenses can add up. 

During your monthly financial planning sessions, try to determine if there will likely be any extra costs that month and in the months following. It may be that you can put aside a little extra for a few paydays, rather than relying on just 1 paycheck to get you through and then pushing the rest onto credit cards. Depending on the celebration, you may also choose to deprioritize non-essential expenses, such as subscriptions, to save this money for a bigger event.

This doesn’t have to just be the case for the holidays, either. If you know that a household appliance is coming to the end of its life, or your child is about to outgrow their clothes, planning ahead can mean that you don’t have several big bills all hit in the same month.

37. Keep an Emergency Fund

Unfortunately, at some point in your life, you will probably incur an expense that you weren’t expecting. However, you can regularly put aside a small amount of money into a savings account that can then be used when absolutely necessary. While the expense might surprise you, it doesn’t mean you can’t prepare for it.

Research shows that 43% of Americans bill emergency expenses to their credit card, which can lead to the total cost actually being higher, thanks to interest. Additionally, if you can’t afford to make regular, significant payments, this debt can stay on your credit report for a long time, negatively affecting your credit score.

Having an emergency fund can mean that should the worst happen, you’ll have the funds to pay for the solution without having to go without in other areas of your life. Even if the amount you’ve saved doesn’t cover the full expense, it can reduce your overall debt and make it easier to pay off additional debt quickly.

Bottom Line:

Experts suggest having 3 to 6 months’ worth of living expenses in an emergency fund, but any money you put away can help. Try setting up a standing order for a regular amount to transfer to a savings account on payday – you can always top this up if you have any extra spare.

38. Build Sustainable Financial Habits and Set Goals

Building sustainable financial habits into your routine means you’ll be more likely to stick with them rather than dropping them when money is tight. Automate your financial transactions and savings as much as possible to make it easier for yourself, and get into the routine of checking in on your accounts. 

Setting clear financial goals for yourself can help motivate you to keep up with your habits and incentivize you to keep saving. Whether it’s a specific purchase you want to make, a holiday you want to go on, or a lifestyle you want to lead, try to understand where you want your finances to take you.

39. Expand Your Financial Knowledge

The idea that “knowledge is power” isn’t new, but it’s particularly pertinent when it comes to finance. The more you know, the better decisions you can make for your specific circumstances. Especially when money in your accounts can fluctuate, it’s all about making the most of what you’ve got, whether that’s $20,000 per year or $200,000. 

Financial literacy isn’t a subject that is covered in school, so you’ll need to expand your own knowledge as your finances grow. In addition to reading books and blogs, listening to podcasts and following financial social media accounts can be an easy way to get bite-size tips. There may even be advice aimed at your demographic – whether that’s young people, married couples, parents, high-income individuals, or those looking to invest for the first time.

Remember that the advice you’re reading isn’t personalized to your own specific situation, so you’ll need to use your judgment or seek professional advice if you’re concerned about the risk of losing money or what financial changes would do to your living situation. However, by understanding terminology and financial principles, you can feel empowered to better manage your money and be in a better position to understand key terminology.

40. Learn How To Say No

Especially in your twenties and thirties, it can be hard to say no to social invitations, buying things for your new home, or attending friends’ weddings, bachelor parties, or baby showers. All of these costs soon add up, leaving you spending money on things that often aren’t even directly for you. In addition, you may feel pressure to buy new clothes or spend money to look a certain way to fit in and keep up with the crowd. 

While some expenses can’t be avoided (for example, you probably wouldn’t want to miss a friend’s wedding), learning how to say no – and avoid unnecessary expenses such as regularly buying new clothes – can help you keep costs under control. You should also ensure you can afford to commit to something before you say yes. Although it might be hard to miss out on a holiday or a social event, it’s not worth putting yourself into debt.

41. Don’t Get Swayed by Social Media

Every day, social media bombards us with images of other people’s holidays, dinners out, and big life moments, plus ads for products directly related to our browsing history. The rising impact of influencers is also changing the way we shop, making us feel like we need certain products to achieve a specific aesthetic. All of this can make it difficult to resist the temptation to buy new items regularly.

If you find yourself drawn into purchasing items because of social media in an unhealthy way, it might be time to put some rules in place. Unfollow tempting accounts, put limits on how much time you spend online, or even uninstall apps together and only use them on your browser to make it more difficult to log in. Alternatively, set a budget for miscellaneous purchases, and consider getting a separate account (and card) that is only used for non-essentials. You can then deposit a set amount of money into this account each month, and once it’s gone, it’s gone.

42. Don’t Ignore the Benefits of Saving

When money is tight, it’s often hard to think about putting even a little bit into a savings account. You might feel that there’s not much point or be more comfortable having it easily accessible in your current account. However, saving even a small amount of money means you’ll benefit from compound interest. This is the idea that you’ll earn interest on the funds and then interest on the interest – so your savings will multiply. 

Since savings accounts typically have better interest rates than current accounts, it’s best to put this money away to get the maximum amount. In most cases, you’ll still be able to withdraw these funds if needed, but check the account terms before you move the money.

43. Don’t Forget To Allow for Some Fun Funds

Most of the time, money management doesn’t feel fun. It’s easy to get caught up in the process of making sure you’re not in debt, paying bills, and saving for the future so that you don’t actually spend anything on items that aren’t essential. While it’s important to be sensible, ultimately, your hard work is putting money into your account, so you should be able to get some benefit from it.

Try allocating a certain amount of money (or a percentage of your income) to “fun funds” each month. You can spend this pot of cash on whatever you like without worrying. It could be as small as buying a coffee, but the idea is that you get something you enjoy as a reward for carefully managing your finances. 

44. Reach Out for Expert Support if You Need It

Managing your finances can be complicated. If you’re struggling to know what to do or want specialist advice, make sure to use the resources available to you and seek expert support.

For example, credit counselors offer a service where they go through your debts with you and help you create a plan to tackle them. You can also ask your bank what support they can offer. For more general advice, speak to a financial advisor.

45. Take Care of Your Mental Health

Finally, make sure to protect your mental health as you navigate your way through challenging financial periods. Try to be compassionate to yourself and speak to friends and family (or a therapist) if you’re feeling overwhelmed. Once you’re in a better place, consider implementing strategies to help you avoid this situation again and have a more secure financial future.

Final Thoughts

For most people, borrowing money and having good credit are necessary parts of life. Building a solid credit history and maintaining a high credit score is essential, and doing so can substantially impact one’s overall financial life, both now and in the future.

Whether you’re trying to improve your credit score or are simply starting to build your financial history, following the tips in this guide will help give you the best chances of boosting your credit rating and sustainably managing your finances.