Can Making a Budget Improve Your Credit Score?

Budgets are very helpful tools for those looking for a more effective way to manage their finances. Budgets may seem like they just track expenses and income on the surface, though when you look a bit deeper, you can see that budgets have the ability to completely alter your financial trajectory.

While there are many ways to improve your credit score, budgeting is one method that is often forgotten.

Let’s look at a few ways in which making a budget can have a positive impact on your credit score.

Budgeting Helps You Pay Your Bills On Time

Can Making a Budget Improve Your Credit Score

On-time payments are the most important factor in a credit score. In fact, they make up 35% of your FICO score. With a history of on-time payments, you can expect a boost in your credit score. However, if you have an inconsistent payment history, you may look like more of a risk to lenders.

Late payments can lead to fees and penalties, not to mention have a negative impact on your credit score, putting you in financial distress.

With an effective budget, you can make sure you stick to making on-time payments.

Stop Relying So Much On Credit

Your credit utilization ratio is the second-most important aspect of your FICO credit score.

A credit utilization ratio is a measure of how much you rely on your debt. You can add the balances on your credit cards and divide them by your total available credit to get your credit utilization ratio.

Let’s say you have a $1,000 credit limit and a credit card balance of $500. In that case, your credit utilization ratio is 50%. Experts say it’s best to keep your credit utilization ratio below 30% at all times.

When you aren’t on a budget, it’s easy for your credit utilization ratio to increase. However, when you budget properly, you can always ensure you’ll have money to cover your bills so you don’t have to put as many expenses on your credit card.

Repay Your Debt

Trying to improve your credit score with debt on the books can be a challenge. If you’re looking to erase debt from your life, you’ll want to create a budget to get rid of other expenses so you can allocate savings toward your debt repayment.

When you stick to a budget, you can make debt repayment strategies feel far more manageable.

Final Thoughts – Create Your Budget Today

As you can see, creating a budget is helpful in more ways than simply helping you save money.

As the cherry on top of creating your budget, you may consider adding tradelines for sale to your credit score to get it where you want it to be.

If you’re looking to potentially increase your credit score, get in touch with us here at Personal Tradelines to see what we can do. We’ve helped introduce thousands of customers to the beauty of tradelines, securing positive financial futures. We look forward to hearing from you.