As baseball season begins, people may be more interested in watching pre-season games and planning trips to the ballpark than focusing on their credit. However, consumers can learn a lot from the strategy on the field to improve their credit this spring
In baseball terms, to help improve their credit scores consumers should:
Mind the Salary Cap
Just like your favorite baseball team has a cap on how much it can spend on players, you credit card limits how much you can charge to it. In the baseball world, it may prove beneficial to spend as close to the salary cap as possible to attract the best players, but this strategy doesn’t apply to your finances.
When it comes to your credit cards, it’s best to have no more than 20% utilization in order to have the highest credit score and to pay the balance in full each month if you can.
Don’t Try to Do too Much All at Once
When a player tries to hit a home run every at bat, he’s setting himself up for failure. More often than not, it’s better to just get on base, which keeps the inning going and puts pressure on the defense. When facing massive debt, consumers should improve their financial situation little by little, and take steps every “inning” to better the situation. While big plays might be sexy, a little bit of patience and a longer-term strategy will pay off in the long run.
Players awarded the Gold Glove at the end of each season make very few errors on the field. Oftentimes, a simple fielding error can cost a team a game. The same can be said with your credit. Errors such as late payments and overdraft fees can prove costly and have a dramatic negative impact on your credit score.
Keep an Eye on Your 'Rotation'
Your financial season is like the long journey from spring training to the playoffs.
You have several payment options at the cash register, credit card, check, debit, and cash; just like in baseball, try to maintain a “rotation” of payment methods. That way, you’ll be better suited for a deep run into the playoffs.
You won’t make it through the whole season and into the playoffs by overusing your star pitcher --your credit card. Relying too much on your credit card can leave you on a slippery slope and will lead to accumulated debt.
Just like in baseball, try to maintain a “rotation” of payment methods. That way, you’ll be better suited for a deep run into the playoffs.
Don’t Get in a Rundown
Players never want to get caught in a rundown while rounding the bases and the same thing applies to your finances. Establish a budget and make sure to have savings set aside for a rainy day in case you get laid off or have an unexpected expense creep up you have something to fall back on.
Look for a Mid-Season Trade
Sometimes it proves beneficial to trade players to fill a key hole on the team. With credit cards, it may make sense to transfer your balance to a card with a lower interest rate or to a card with 0% interest for a year if you can pay the entire balance off before you start to accumulate interest.
Ken Lin is the CEO and Founder of Credit Karma, a pro-consumer credit score company dedicated to helping consumers better understand the power of their credit. For a over decade, Ken has leveraged his analytic background in the financial services and internet marketing sectors. Ken’s credit and financial services experience stems primarily from E-LOAN and Partners First.Ken holds a B.A. in Mathematics and Economics from Boston University.