Do you have some money set aside for the unexpected?  Most experts say we should have access to an amount equal to at least six months’ worth of our expenses.  You never know when you might need a new tire or other car repair, or have a sudden medical expense or a window replacement for your house.

How does this help you get a better credit score?  By relying on your cash stash for unexpected expenses you are less likely to increase your credit card balances.   Having balances under 30% of the account credit limit can help your scores.  Remember that the second largest factor in your FICO score is your debt-to-available-credit on your revolving accounts.  When those balances are over half of the credit limit, credit scores typically go down.  And if they are close to being maxed out, scores can tank.

Even though you may use the cash in an emergency, we call it a Smart Fund.  Just start saving your coins or put aside $5 or $10 each week and designate that as your Smart Fund.  If it is in a savings account at the bank, you won’t be tempted to use it for daily expenses such as fuel or groceries.  You may be surprised by how quickly the little deposits add up and it sure is a good feeling to know that you can rely on your own money when the unexpected happens instead of paying high interest and going into debt with a credit card. 

And you’ll help your credit scores grow by keeping those credit card balances down.  For more Financial Fitness tips, visit the You and Your Money section of our site.