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8 Types of financial tools you need to build your credit

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Your credit score is one of the most important pieces of data there is about you, yet many of us don’t even know what our scores are, or how they’re calculated. The last thing you want to do is find yourself in a situation where you need a good credit score to secure a loan or make a big purchase only to discover that your credit is lacking. Whether you have a good score you want to make great, or a poor score in need of recovery, the good news is there are now many different apps and tools available to help you improve your credit score. Here are the top credit management aides you should consider using when your score needs a boost.

Banking apps

The first and simplest step to getting started with managing your credit is to keep a close watch on your bank account and any cards associated with it if you have credit cards with your bank. Using a banking app means you have instant access to your banking information on your phone in just a few seconds, and you can even set up notifications when money comes in or out of your account to make it easier to stay on top of your financial situation.

Credit card apps

If you have one or more credit cards open that are not run through your bank, you should also be taking advantage of your credit card company’s mobile services as well. As with your banking account, these services send regular notifications of any spending as well as track upcoming billing dates to make sure you don’t miss any payments which are crucial to maintaining a strong credit score. A credit card app also is a great way to fight fraud as you can set up alerts for every charge which allows you to see immediately if any fraud is being issued to the account so that your score doesn’t go down as a result of others’ illegal actions.

Credit and bank linking

One of the most challenging balances to strike for your credit is managing your credit cards responsibly, particularly for individuals new to credit. While it is important to have a credit card and use it to start building a credit history if you’re not careful you can quickly find yourself in deep debt that you can’t manage. With apps like Debitize which link your credit card and your bank account, every time you make a purchase with your credit card a corresponding amount is set aside in an FDIC-insured bank account. When your credit card bill comes through it is automatically paid from that account. This allows you the benefits of building credit while treating the card like a debit card and avoiding mounting debt.

Spending trackers

Once you’ve established a pattern of not spending money you don’t have it’s time to start looking for areas where you can reduce your spending in order to increase your savings and start paying down your debt. Credit utilization, or the percentage of available credit on all of your credit cards which you are currently using, is a key factor in determining your credit score, and by lowering your utilization with smart saving you can raise your score significantly. Apps and web sites like Mint allow you to classify all of your spending and income to better visualize how much of your money is being spent on different things like food, living expenses or recreation, allowing you to identify areas you can cut back.

Debt calculators

omplicating factor when it comes to paying off your debt is the fact that not all debts are created equal, so finding the best payment plan is not as simple as just paying whatever you can toward any of your debts. If you’ve got multiple credit cards, loans and other lines of credit, a debt calculator is a useful tool for showing how much each of those debts will ultimately cost you based on your current payment plans and allows you to see how adjusting those plans can alter your overall cost to pay them off. This is extremely useful for devising the best possible plan for debt reduction.

Budgeting apps

If you struggle to control your spending, either on your credit cards, with your bank account or both, then you may benefit from utilizing an app like You Need a Budget. Budgeting apps help you take the money you earn and classify every dollar as being set aside for a specific purpose. Rather than working in hypotheticals and ideal situations, these apps help you take your actual financial reality and apply it effectively to generate responsible spending habits.

Savings apps

If you’ve ever been at a store that has a charitable partnership where you can round up your purchases to the nearest dollar with the balance being donated, you may be pleased to learn that you can apply a similar process to your savings. Apps like Acorn take each purchase you make and rounds them up to the nearest dollar. The money that is rounded off is then either entered into a savings account or an investment portfolio. While you may not notice the change on each purchase, over time your savings add up as it amounts to saving or investing an average of 50 cents every time you use your card, which is no small number of times in months and years. Before you know it you’ll have a tidy nest egg built up without having even noticed the extra spending at the time you swiped.

Credit trackers

The most powerful tool for getting your credit headed in the right direction is credit monitoring tools. If you’re wondering how do I even get my credit score to know what needs changing, credit tracking is the answer. With a tracking app, you not only can see what your score is with the leading credit reporting agencies but also get explanations for why and advice on how to best improve your score.

Raising your credit score is a marathon, not a sprint, but that’s why it’s important to start immediately. The sooner you begin utilizing tools to raise your credit score the sooner you’ll hit your goal.

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