We all know the importance of fitness for a better quality of life. Just like staying physically fit or keeping our minds sharp, financial fitness is just as important. Even though our physical strength and skills may diminish a bit as we age, we can maintain robust finances throughout our lives. The following four tips are intended for seniors but can be adopted by money-conscious folks at any age.
Don’t Co-Sign any Loans
A word of warning here. With good credit, family members and friends may seek you out to co-sign loans they can’t qualify for on their own. Remember, there’s a good reason they don’t qualify. If you co-sign a loan, you are as liable for the debt as the primary borrower. If they don’t pay, the lender will come after you.
Co-signing loans can also affect your credit score negatively. Even if the primary borrower is making timely monthly payments, the loan balance will be lumped into your total liabilities. And too much debt could affect your eligibility for credit if you need it in the future.
Use Credit Cards Occasionally
Use a credit card once in a while to keep your credit active. But keep balances low and make monthly payments on time. Most importantly, pay the monthly balance in full (more below). Just so you know, consumers who use credit moderately are considered a better risk than those who don’t use credit at all.
Don’t Carry a Balance
By the time I retire, I don’t want any more debts. That includes mortgage payments, car loans and credit cards. If you’re still paying a mortgage, try to pay it off as soon as possible. But before you do, you may want to discuss with your tax advisor how eliminating your mortgage will affect your tax situation.
As far as credit cards go, pay the balances in full each month as suggested above. That way, you never pay interest and never carry balances forward.
Check Credit Reports Each Year
Check your credit report annually for accuracy. Get your credit reports free at www.annualcredit report.com or by calling its’ toll free number (1-877-322-8228). If you received free copies within a year of your request, you must pay a small fee.
When you get your credit reports, review them to make sure your name, address, and other personal information are correct. Then look over the account information carefully. Are account balances and payment amounts stated correctly?
If you find errors on your credit reports, call LSS’ Counselor on Call at 1-888-577-2227 for information about how to correct those mistakes. Better yet, schedule an appointment for a Credit Report Review to have one of our certified financial counselors help you.
Keeping our money in shape is important at any age. LSS can help get your debts under control or teach you how to understand your credit report. Remember, we’re just a phone call or email away!
Author Barbara Miller is a Financial Counselor at LSS Financial Counseling. She specializes in Bankruptcy counseling and education. Have questions about rebuilding after bankruptcy? Email us today at firstname.lastname@example.org