EXECUTIVE鈥橲 DESK
Palmer: Financial awareness leads to financial wellness
As Aug. 14 was National Financial Awareness Day, I cannot think of a better time to remind New Mexicans of the importance of managing their credit and finances.
The Consumer Financial Protection Bureau found that New Mexico鈥檚 average financial well-being score was below the national average. This can make it harder for New Mexicans to remain financially confident and prepare for their futures. Financial wellness does not happen overnight. It begins with understanding your financial situation, knowing the steps to improve your credit and having the confidence to make informed decisions.
Building or rebuilding your credit may seem overwhelming at first, but it doesn鈥檛 have to be. You don鈥檛 need years of credit history or an elaborate plan to start seeing progress. By practicing a few smart habits consistently, you can move your credit score in the right direction.
Whether you鈥檙e building credit for the first time or working to improve your score, a secured credit card or credit-builder loan can be a great place to start. Both options can help establish a positive payment history, which is one of the most important factors in your credit score. U.S. Eagle offers these solutions to help members strengthen their credit and work toward their financial goals.
When using a credit card, I recommend keeping your balance below 30% of your available credit limit. This is known as your credit utilization ratio, and maintaining a lower utilization rate demonstrates responsible credit management. Consider making small, regular purchases with your credit card and paying the balance in full each month. This helps establish a positive payment history while potentially saving money on interest charges.
If you鈥檙e working to rebuild your credit, bringing at least one account up to date can be a great place to start. Because payment history is so important, making consistent on-time payments moving forward can help you make steady progress toward your credit goals.
It can be daunting to pay off a large amount of debt. By reducing your balance by $20 to $50 per month, you can lower your credit usage and help nudge your score upward. You don鈥檛 have to pay everything off at once to improve your credit rating.
A debt consolidation plan is another step if juggling multiple payments becomes overwhelming. You can apply to consolidate your debt into one manageable payment, making your finances easier to manage. Low-interest rate options are available, but it will be critical to find the right terms to fit your budget.
Be cautious about opening too many new accounts at once. Credit card offers are everywhere, from your mailbox to store checkout counters, often promoting discounts or rewards. While these offers can be appealing, applying for several accounts within a short period may temporarily lower your credit score. Instead, focus on managing your existing accounts responsibly and only consider new credit, such as a secured card or credit-builder loan, if it supports your overall credit-building strategy.
Financial awareness doesn鈥檛 have to be difficult. With the right tools, resources and support, anyone can develop the skills needed to make sound financial choices and achieve their goals. Resources such as SavvyMoney, available through U.S. Eagle, can help monitor your credit score, better understand your profile, set financial goals, and receive personalized recommendations to accomplish financial well-being.
Finally, it鈥檚 important to honor your victories as credit recovery does not happen overnight. With each on-time payment you make, you help lower your balance and improve your score, leading to more financial flexibility. That鈥檚 worth celebrating.
Financial wellness begins with awareness. When you understand your credit, you can recognize ways to improve control of your financial future. Remember, your credit story is still being written, and you have everything you need to make the next chapter your best one yet.
Mariah Palmer is the senior membership development representative for U.S. Eagle Federal Credit Union. Executive鈥檚 Desk is a guest column providing advice, commentary or information about resources available to the business community in New Mexico. To submit a column for consideration, email mnarvaiz@abqjournal.com.
