Whether it's missed bill payments or impulsive spending, ADHD makes managing money more challenging, which, if we're not careful, can lead to low credit scores.
The good news is you can improve your credit score and keep it in a safe zone by following a few helpful tips.
You Are More Than a Number
In the eyes of the financial world, your financial reliability boils down to a three-digit number, ranging between 300 to 850, known as your credit score. Lenders use that number to judge you on your creditworthiness.
The better your number, the better interest rates you'll be able to secure for things like car loans, credit cards, and mortgages.
Check Your Credit History Regularly
Credit bureau companies like Equifax, Experian, and TransUnion, collect information from various lenders to create your credit history report. The fewer blemishes on your account, the better your score.
It's good practice to check your credit report for errors and verify no one has opened accounts in your name.
The site annualcreditreport.com provides a limited number of reports each year. You can also sign up with Credit Karma for their free service, which alerts you when changes happen to your credit history.
The Five Credit Score Factors
A credit score is made up of:
Avoid these bad credit behaviors
Ways to Improve Your Credit Score
The two most essential things when improving your credit score are payment history and credit utilization. Remember, 35% of your score is made up of your payment history, so a long list of missing or late payments on your credit report will be a huge red flag. This is where setting up automatic payments will help.
If you have a lot of debt and have maxed out credit cards, you need to establish a debt payment plan which I covered in "Credit Cards and ADHD go Together Like Forks and Power Outlets." Using the Snowball Method or Avalanche Method will help you establish a debt payment plan to aggressively pay off debt, which will improve your credit score.
We covered a lot of information today. Remember the big picture and that you're doing this for your future. You'll have more freedom and security, a more vibrant life, and be able to wake up feeling less stressed about money.
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