Financial wellness means having control over your finances, feeling secure about your financial future, and having the flexibility to maintain your standard of living. It includes being prepared for major life events such as a wedding, college or higher education expenses, buying a home, and staying on track for retirement. Budgeting, debt management, and long-term financial planning all play an important role in reaching short- and long-term financial goals. There are many local Chamber of Commerce professionals that can provide valuable guidance, and I recommend using these resources to help ensure you stay on track.

Understanding your credit score is essential to achieving long-term financial goals and overall financial wellness. Credit scores are one of the main factors banks and financial institutions use when deciding whether to extend credit and what interest rate to offer.

The primary factors most credit agencies consider when calculating a credit score are:

(35%) Payment History It is crucial to pay your bills on time; this is the main portion of the overall credit score calculation and most important.

(30%) Credit Utilization. Utilizing your credit accounts represents thirty percent credit score calculation. This is primarily focused on the borrowers revolving credit availability and usage. It is important to have revolving debts including credit cards and to utilize them and make payments on time. The recommended balance on revolving debts is less than 30% of the total overall available credit limits.

(15%) Length of Credit History. It is important to establish a credit history and maintain long-term relationships with financial institutions.

(10%) Credit Mix. It is important to have a history of repaying installment loans and revolving debts. Installment loans traditionally offer fixed terms and rates.

(10%) New Credit. Borrowers should avoid opening too many credit lines in a short period of time. It is recommended that borrowers add additional credit only when it is required or makes financial sense.

Knowing your credit score and monitoring your credit accounts can help you improve your credit and protect against fraud and identity theft. Many credit card companies provide customers with free credit scores, and some financial institutions also offer free access to credit reports.

The costs of a low credit score go beyond higher interest rates on loans and credit cards. Employers, insurers, landlords, and business lenders may review credit history, which can affect job opportunities, insurance premiums, rental approvals or rates, and business loan terms or approvals.

Low credit scores can lead to higher rates on mortgages, auto loans, personal loans, and credit cards, adding hundreds of dollars per month or thousands per year.

Hardship. If you experience a financial hardship and may not be able to meet your payment obligations, contact your lender as soon as possible to discuss their hardship policies.

Improving credit scores. The good news is that credit scores can improve with a focused plan. Some issues may be resolved in the short term, while others may take several years to correct. The first step is to review your credit report. The federal government provides free annual access to your comprehensive credit report at www.Annualcreditreport.com. Review it carefully for errors and confirm that all listed debts are being repaid. It is also important to maintain a budget that identifies available monthly funds, including discretionary income that can be used to pay off any collection accounts found on your credit report.

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