No one sets out to mismanage the family budget and trash their credit. But combine a still-struggling economy here with an unexpected layoff there, add a late fee on a utility bill to an impulse buy there, and bam—you’re in trouble. Here are some tips that each and every family accountant should bear in mind to keep the household in the black:
Don’t Let Taxes Rack Up
Pay your taxes on time each year, or as close to on time as possible. Rack up enough back taxes and the government may place a lien on you. This is a public record item that shows up on your credit report and can hurt you the next time you want to buy a new home or car. The Internal Revenue Service tends to be lenient and flexible with payment timeframes, but make sure you don’t push that courtesy too hard and wear out your welcome. Do and pay your taxes on time, and if you’re already late, get it figured out with the IRS.
Cancel Your Accounts Properly
This one can sneak up on you, but cancelling your accounts improperly can come back to bite you. Even something like a gym membership can wind up seriously affecting your score. If you pay your membership fees automatically through a credit card, you may wind up with bad debt hanging over your head if you don’t cancel through the proper channels. Make sure to read your membership application and make certain that you understand the cancelation process.
When we watch movies and television, we see cybercriminals getting away with million-dollar digital heists. In reality, most cybercriminals only make away with pennies by comparison. When you’re a criminal who can hack any bank account, it makes more sense to steal from a hundred people in barely noticeable amounts than steal a large amount from one person and go to jail for it. More brazen scammers will steal your identity, open up lines of credit and take out loans in your name, and stick you with the bill and bad credit when they default. You should protect your identity no matter the amount of money, because it can have a serious impact on your credit.
Don’t Close a Credit Account Without Clearing the Remaining Balance
You want a clean break when you close a credit account, so take the time to clear up your remaining balance. Whatever you owe, pay it off and make a clean getaway. Don’t close an account while a balance is present.
Being the one in charge of a family’s finances can be stressful, so take the time to learn how to reduce expenses and improve your credit. Talk with your family about your new financial plan of action, and you should be able to keep your household’s finances in check.