My credit score was not great when I first started learning about money, but recently I’ve benefited from multiple refinances where my excellent credit gave me huge benefits and saved me tens of thousands of dollars

After refinancing our mortgage AND the parent plus loans I’ve been paying, I’m more convinced than ever that you shouldn’t ignore credit. When you have bad credit you can get denied for loans or have to accept bad rates that end up costing you a lot of money.

Instead we should work to make your credit score better without going into debt. I know not everyone agrees on credit in the personal finance world – everyone gets feisty – but it’s a fact of life for us real life every day people.

Over the years I’ve been able to raise my low credit score to one that is considered excellent. This excellent credit score has helped save me lots of money in interest rates on my loans and has put me in a much better position financially.

Learning how to improve my credit score took some work so I’d like to share some of the tips to improve credit scores that I learned along the way.

Why You Should Improve Your Credit Score

The unfortunate reality is that your credit score matters. 

Good credit gets you access to better rates, allows you to pay less on big items like homes and cars, and even determines your ability to qualify for certain jobs or rentals. 

You don’t have to love debt or need credit card debt to get a good credit score. In fact, I hate debt. But I also live in the real world and out here your credit score is a tool that can open up doors to a better experience in life.

Having no credit sounds like an amazing idea but in the real world it makes things much harder. You will have access to fewer companies when you apply for a mortgage because many won’t do manual underwriting. You’ll  have access to less rental options because many landlords don’t want to (or can’t) go through the hassle of evaluating your finances and manually approving you. 

The fact of the matter is that having good credit opens up doors for you.

Here are a few reasons why building a good credit score is important:

• Good credit will get you better interest rates when you need credit for financing a large purchase.
• Good credit means you will pay less overall on those big purchases you have to make on credit.
• Buying a home requires a credit score with most lenders and the better your credit score, the better loan you will be able to get. 
• Having bad credit can stop you from being able to buy a home at all until you improve it.
• Your credit score determines your ability to rent an apartment and many won’t accept below 700.
• Your credit score can affect getting certain jobs in certain industries where you have to appear trustworthy.

Clearly having good credit is important. It affects many areas of your life and having bad credit will force you to pay more for the same things others get at a much lower overall cost.

The good news is your credit score is something you can work to improve!

We have excellent credit now so we got great rates and had an easy time with our refinance. I got a great rate on our mortgage and I got to move the rate on student loans from 8.5% to just over 3%. Before that? My mom got denied for a refinance because of credit. She’s been working on her credit and debt payoff but in the real world she is still penalized by companies and forced to pay 5% more interest. Or even worse on other products.

It’s not fair. It’s really not. When you have bad credit you have to pay more when you do need to purchase something with credit. You can also be denied certain jobs, rentals, and more. Pretending like you don’t need good credit might sound cool and counter cultural until you are the one being denied opportunities to make your life better…. because of credit.

The good thing is that credit is something that can be fixed. It’s a game. There are known things you can do to improve your credit. And if you’re smart you can benefit from it. Pretending it doesn’t exist doesn’t work for most of us so I’m more convinced than ever it’s important to understand how credit works, learn to use it responsibly, and benefit from the concept.

What Makes Up Your Credit Score

In order to improve your credit scores, you need to understand what makes up your credit score.

To help you understand how factors affect your credit score, here’s a screenshot of my info in Credit Karma while I have a 823 credit score.

Here are the things that will affect your credit score from highest to lowest impact:

1. Payment history – Percentage of payments you’ve made on time
2. Credit card use – How much credit you’re using compared to your total limits
3. Derogatory marks – Collections, tax liens, bankruptcies, civil judgements on your credit report
4. Credit age – Average age of your open accounts
5. Total accounts – Total open and closed accounts on your report
6. Hard inquiries – Number of times you’ve applied for credit (in the last couple years)

These are the things that impact your score the most. Two of them are things that you do automatically when you start budgeting and paying down your debt – you pay things on time and you use less of your available credit.

So let’s talk more about these factors and how you can use them to actually improve your credit score.

How To Improve Your Credit Score

While I don’t take pride in having a great credit score, it has been something I’ve worked to improve over the years and has benefited me greatly. Ultimately a high credit score wasn’t a point of pride but a practical matter that I needed to improve to help myself and my family.

It is possible to build your credit score but there are some things you need to know about improving your credit score. Having this knowledge is the first step to improving credit and the next will be implementing it. 

Here are some important things to know:

• It is possible to rebuild credit responsibly over time.
• There is no QUICK way to fix credit. Any method will take time.
• You do not need to pay someone else to fix your credit. You can do it.

My own credit score went from the low 600s to the high 700s and now to the 800s. This has improved my loan interest rates and helped us get a good mortgage rate which saved us tens of thousands of dollars in interest.

The Basics Of Improving Your Credit Score

If you want to improve your credit score, there are some basics you need to know about how to improve your credit and therefore your credit score.

The basics of improving your credit score:

1. Check your credit score AND your credit report
2. Pay your bills on time
3. Reduce the amount of debt you owe
4. Increase your credit limit

Those are the very basics of building your credit over time.

Of course, there are lots of little things to do with each item and in certain situations so we will walk through them all in the coming sections and action steps. You can do this!!

For action steps you will want to do the following items:

• Check your credit score for free with multiple sources.
• Check your credit report and make sure it is accurate.
• Pay your bills on time every month and never be late.
• Keep your balances low on credit cards and revolving credit.
• Do not close old accounts you don’t use.
• Apply for and open new credit only as needed.
• Pay off debt as you can rather than moving it from account to account.
• Make responsible purchases on credit that you know you can pay off.
• Don’t obsess about your score, just let it improve over time.

These are the basics for improving your credit score. I’ll break each one down further below.

Check your credit score for free.

Improving your credit starts with knowing your credit score and knowing where you stand with credit. Once you know what you are working with you will know how much it can improve by implementing the basic ideas for improving a credit score.

You can check your credit score for free from a number of sources these days. You should never have to pay to get your credit score.

Check your credit score from 3 different sources.

I recommend checking your credit score in at least 3 locations so you can get an average and see what different scores are saying about your credit worthiness. Different sources will report a different FICO or Vantange score so checking multiple sources gives you a clear idea of what different places are seeing.

Here are a few places where you can check your credit score for free

• Experian app
• Credit Karma
• Creditwise – offered within Capital One accounts

Checking your score is the first step because you have to know where you are starting. It may be hard to see and face the facts if your score is very low but finding out where you start is the only way to improve.

Check your credit report and make sure it is accurate.

When you are trying to improve your credit you have to not only find out your credit score but also check your credit report to see what the credit bureaus are seeing.

Luckily, once a year you can pull your credit report FOR FREE thanks to the federal laws in the United States. You can get a free copy of your credit report every 12 months from each credit reporting company from annualcreditreport.com.

There are multiple reasons to check your credit report:

• Checking your credit report gives you an idea where you can start improving credit.
• Reviewing credit reports helps you catch signs of identity theft early.
• It allows you to ensure that the information on all of your credit reports is correct and up to date.

Here’s how you complete this step:

Step 1: Check your credit report.

There is ONE website in the US where you can pull your credit reports for free thanks to this law: annualcreditreport.com

You don’t need to pay for your report from any bureau or any other website. This is the only website you need! It is the only official site explicitly directed by Federal law to provide them.

Sign up and enter your information on the website to get your three credit reports.

Next, review the information. If there is any incorrect information, make a note of it for the next step.

Compare the three credit reports against each other. Do they match? Where are the discrepancies between the different bureaus? Mark these for your information for future steps.

Step 2: Dispute and remove any incorrect information.

Sometimes there may be mistakes on your credit report. That’s why it is important to pull and double check your credit report every year.

Once a year you can should pull your credit report for free and make sure nothing has changed or been reported incorrectly. Staying on top of your credit makes sure when you do build good credit it will be there for you when you need it.

Pay your bills on time every month and never be late.

On time payments is a huge factor in your FICO score and all other credit scores. Paying your bills on time is actually one of the biggest factors in determining your credit score. FICO says it is 35% of their calculation for your score.

Unfortunately missed payments or late payments will negatively affect your credit score. Paying your current bills on time should be the first active step you take toward improving your credit score.

If you’re having trouble with late or missed payments, here are a few things to try to pay your bills on time:

• Make a list of every bill you have to pay. You should have an accurate and up to date list of all bills you owe each and every month. If you have a lot of bills to pay it’s easy to let one fall through the cracks if it’s not listed. 
• Check your credit report to make sure you’ve included every bill due on your list. Your credit report lists all lenders you owe money to so you can add any debts you’ve either missed or forgotten entirely.
• Review your bank accounts and credit card statements for recurring bills you pay each month. This will include things like subscriptions, memberships, cell phone bills, etc.
• Add the due dates to your list of bills to pay. You have to know when bills are due in order to pay them on time or early. 
• Set up automatic payments for bills. It’s easy to forget a due date when your life gets busy so make sure your bills are paid automatically when it’s an option.
• Set up payment reminders. You likely can’t pay every bill automatically so you will never to make sure you have a system for making manual payments on time. You can do this on some banks or just use your calendar. Put all your bill due dates into your calendar and set up automated reminders so you can pay the bill on time or double check autopay to make sure it was paid.

This might seem like a lot of work but always paying your bills on time will help you maintain good relationships with companies and improve your credit score.

Getting current on your bills and staying current without missing payments or paying lae will help you improve your credit score. The longer you pay your bills in a timely way the higher your credit score will increase and the less your past payment mistakes will count against you.

If you are truly struggling just to make ends meet or feel like you are drowning in debt, then reach out to a legitimate credit counselor or financial coach. Don’t go to a disreputable credit repair place with big promises but look for help to get out of the hole you’re in right now. This solution won’t hurt your score and will give you a plan to manage your credit by paying on time and improving slowly over time.

Keep your balances low on credit cards and revolving credit.

How much credit you are currently using will affect your credit score. If you are only using a small percentage of the credit you could be using then your score will be higher.

Having a good credit score doesn’t mean you need overwhelming amounts of debt. In fact, having large debt balances usually hurts your credit score because of the credit utilization factor.

Your credit utilization is the balance of your debt compared to the available credit you have access to. This contributes 30% to FICO score’s calculation which means it is something you need to work on asap. 

The goal here is to pay off debt while still keeping your credit limits high. This lowers the amount of credit you are using compared to the amount you could actually use. 

The first step of course is paying off debt so we will focus on that step here. It is one of the easiest areas to work on but it does require discipline, focus, and organization.

Do not close old accounts you don’t use.

While this is debated by some in the personal finance world, I found that not closing accounts helped my credit score.

When I finished paying off a debt or simply moved on to a new credit card for rewards, I never closed the old account unless it had an annual fee.

If a credit card did have an annual fee, I did close the account but asked the company to roll the credit limit to another card without a fee or to another existing card. This trick helps raise your credit limit drastically!

Having old accounts still open for use will help increase your credit score since age of accounts is a big factor in your score. You don’t have to use your older credit lines often but just enough to keep them open.

Apply for and open new credit only as needed.

Having multiple accounts open for long periods of time can help your credit score but that doesn’t mean more is better.

You don’t need to open 25 different accounts to get a good credit score. In fact I have less than 10 and have an excellent credit score.

Be selective in the credit lines that you open. Don’t max yourself out with too many new open lines of credit. It will drop your credit score temporarily and it could potentially put you in a precarious situation.

If you are in a credit building stage, then you should work on opening new cards strategically over time but never all at once. Wait 6 months or more between opening new credit lines.

Pay off debt as you can.

I don’t carry debt balances and pay off all my debt but still keep my credit score high so it is available for me to use if I need it.

Paying off debt rather than moving it around with transfer balances is a smart move for your overall financial situation. It also helps your credit score because the lower your debt utilization the better your score will be.

Paying off debt can help improve your score if you are reducing the amount you owe and freeing up space you can use. Debt utilization amounts are a part of the credit score as we discussed before. Your score will rise when you have lower amounts of debt because you are utilizing less of the credit available to you.

Here are some practical ways to pay off debt:

• List out all of your debts and make a plan to pay them down using either the debt snowball (lowest balance to highest) or debt avalanche (highest interest rate to lowest).
• Pay off debt instead of moving it around. Paying off your debt will lower your overall utilization amount which will increase your score.
• Use extra money in your budget and from side hustles to pay down your debt faster. 
• Keep balances low on credit cards and any other revolving credit you have open. High balances on credit cards will negatively affect your score.
• Do not close your unused credit cards when they are paid off unless there is a yearly fee for keeping them open. If you do close a credit card, ask the company to roll that credit limit to another card you have open with them.

Always make sure you make responsible purchases on credit that you know you can pay off.

Don’t obsess about your score, just let it improve over time.

It might be tempting to pay someone to help improve your credit score quickly, but be cautious of these services. Many are not helpful but take your money for something you can do yourself.

You can improve your credit score over time by following common sense credit guidelines and getting on a budget.

The less you obsess about your credit score the better off you will be.  Ultimately a credit score isn’t the most important thing in your financial life and there are ways to operate around a bad credit score or no credit score at all.

If you are planning to use credit less and don’t need it for a future mortgage or car loan or new job then your credit score will be less important.

Remember that even if you are planning to use credit in the future, you can work with what you already have, pay things on time, use credit responsibly, and build your credit score from there.

When you are saving money to pay off debt or afford a big expense like your first home, you likely will be looking at a number of options to save money. One area where you can save a lot of money is by living with roommates.

Why live with roommates?

Living with roommates is actually a great way to get social interaction and save money!

When you live with roommates you are able to save money because you are splitting your rent costs. Rent or mortgage costs are generally the largest line item in most people’s budget. Getting a roommate to cut down on that expense makes a lot of sense when you are trying to save money.

Another benefit of living with roommates is the social interaction and community. This can be a huge positive when you have the right roommates and love the people you live with. They can greatly add value to your life, but you have to be careful because it can also go the other way.

Those are the top two benefits I personally found when living with roommates but there are plenty of others!

Living With Roommates

I’ve had plenty of roommates over the years during college and after. I’ve lived with friends,  family and strangers.

In fact, I’ve never lived alone until I briefly lived alone for 6 months in my late twenties. And even after that brief stint living alone I realized I still wanted to live with other people!

The reality is that living with roommates is harder than living alone because you have to share space. Communication is important and resentments can come up when there are disagreements about how the space should be used. Conflicts can arise over things like chores, cleaning, and sharing food.

Ultimately the reality of living with roommates is that it takes a lot more work on interpersonal relationships but provides benefits that greatly outweigh the level of work you must put in for most cases.

Why I Lived With Roommates 

So why did I still live with roommates when I know it involved a lot of extra work? Why was I willing to deal with the tradeoffs?

I wanted to save money on rent.

That’s it! The number one reason to live with roommates was the reason I did it. Living with roommates was the right choice for me because it was the cheapest living option. Regardless of what city I’ve lived in, or my spot in life, living with roommates has always been the cheapest living arrangement.

Living with roommates might not always be ideal or what you expect, but I know it’s what is best option to save money!

House Hacking With Roommates

A popular solution to not only saving money but eliminating your mortgage is house hacking.

House Hacking is a phrase coined by BiggerPockets podcast host Brandon Turner and it just refers to the strategy of renting out portions of your primary residence to generate rental income that is used to offset the cost of your mortgage and other expenses associated with owning a home.

Basically, you get roommates to live with you in the house that you own and your roommates pay your mortgage! You save money, build equity, and can generate positive income in the right locations.

House hacking is often a way to get into a more expensive home or home ownership in an expensive location where you can’t afford the home on your own. It’s also a great way to squeeze all the value possible out of owning a home so you benefit financially.

Living with roommates in order to house hack is possibly the very best way to utilize living with other people because you achieve accelerated financial benefits from the arrangement.

Here are some of the benefits of living with roommates in order to house hack:

• Lowering your monthly housing cost through generating rental income
• Renting out portions of your property means you still get to use it
• Lowering your taxable income base by acquiring extra tax write offs (mortgage interest deduction)
• Having the possibility of removing your mortgage payment, insurance, and maintenance expenses completely through the rental income
• Learning how to be a landlord without as much upfront risk
• Transitioning into the world of real estate investing again without the huge unfront risk

There are clearly a lot of positive benefits of living with roommates and this is not even including all of them!

Tips For Living With Roommates

If you are single it’s a lot easier to live with roommates because you can simply move into a house with a lot of people or rent a room out from someone.

If you are married this is still possible. It’s also an option for you to rent or buy your own place and then bring in roommates. This will give you more control as you will be in the position of power to set rules and evict the person if things go wrong.

It always helps to have a written agreement or lease with people you are living with even if it’s just a temporary situation or you are the person moving in. This covers both parties in case something goes wrong and there are disputes to settle later. It might be awkward at first to bring up the fact that you want a written agreement to cover your roommate situation, but it’s a very smart idea in the long run!

Additionally there are many things you can do to be a good roommate and ensure that nothing goes wrong. Be a good roommate by:

• respecting your roommates space and privacy
• doing the dishes and other household chores when needed
• not being nosy about the roommates life
• setting clear boundaries for each other and respecting them
• picking up after yourself, especially in common areas
• respecting the other person’s right to reserve and use common areas
• being a happy and positive person in interactions with roommates

Do those things and you won’t have any problems at all living with roommates. In fact, it might be the best thing you ever did!

Help With Living With Roommates

If you want to be extra prepared for living with roommates, or don’t know how to handle a situation that has come up, try reading books and blog posts about how to deal with roommates.

There are several inexpensive ebooks that you can get to help you navigate the world of living with roommates. Try these to start:

• Roommates: A Guide to getting along with a Roommate
• Roommate Survival Guide: 33 ways to stay sane and have fun
• Roommates – How To Solve Tensions And Live In Harmony With A Roommate
• House Mates: A Guide to Cooperative Shared Housing
• Isolation Is Overrated – 8 Steps to Stress-Free Living with Roommates

These books are a great way to learn about roommate living and learn how to solve or prevent common problems that arise among people living together. You can spend $10 on all these ebooks and save yourself from unnecessary strife.

Good luck with your roommate living. I know it’s for me and I hope you can find a way to make it work for you too!

I love selling digital products and I’m glad I finally started selling digital products in 2019 after years of dragging my feet. It has been an incredible and profitable income source in my online business!

Selling Digital Products In 2020

Selling digital products is a highly profitable way to earn money online while also helping your customers solve a problem and improve their lives. It’s truly a win for everyone.

Selling digital products is actually my favorite way to make money online (here are the ways I make money online). I sell digital products that make me hundreds of dollars every month and sometimes even thousands in passive income. I love making products once that I can then sell thousands of times.  

Whether you are a blogger, YouTuber, or online business owner, selling digital products is a great way to earn money online in 2020 and beyond.

Even if it is not your main revenue it can become a great side income that helps you earn money to pay for items you need.

Why Should I Sell Digital Products?

Maybe you are wondering if you should even sell digital products or why digital products are such a great way to earn money online. 

There are a ton of reasons why you might want to start selling digital products. Here are a few:

• Passive income – create products once and sell an infinite number
• No physical inventory to worry about – everything is done online
• Low start up costs – you can create digital products with free programs
• Easy to create products – time to create digital products can be low
• Easy to sell – plenty of avenues to sell your products 
• Easy to create products for multiple niches & interests

These are very compelling reasons for why every person wanting to create an income online should be making and selling digital products. It is a fantastic opportunity to create passive income for yourself while also creating useful products for others. 

How to Sell Digital Products Online

There are many different ways to sell digital products online and each have their pros and cons. 

You can sell on sites like Etsy where you don’t own your platform but can reach a huge amount of customers quickly. 

You can sell on your own website as well which takes more work to setup but you keep more of the money and have more control over your products. 

First, you will need your own website or at least a domain for selling on your own website. See how to start a website or blog here. 

Next you will want an e-commerce platform that will allow you to both take payments and deliver your digital products to your customers. There are many different e-commerce platforms that make this possible so let’s look at the best ones for selling digital products specifically.

Etsy – I love selling on Etsy because you don’t have to find people to buy your digital products – they are already on the platform and Etsy is bringing them to you! It’s easy for beginners to start and Etsy shop and you can get 40 free listings through this link.

Podia –  Podia is a more robust platform that will allow you to not only sell digital downloads but also offer memberships and online courses. If you have plans to grow a full online business it’s the ideal platform to use to keep everything in one place. Get a 14 day free trial of Podia here. 

SendOwl – This platform is specifically designed for selling digital products. You upload the digital products and start selling immediately. This platform is just $9 per month with no additional fees taken our from sales you make. Get a free trial of SendOwl here.   

Woocommerce – WooCommerce integrates easily with existing WordPress websites to sell digital downloads. WooCommerce is not specifically for digital downloads but they have made the process super simple for sellers and do not take additional fees from sales. I currently use WooCommerce to sell my digital downloads on my website. Get started with WooCommerce.

How To Determine Profitable Digital Products

There are tons of digital products you can sell online but if you are looking for maximum profitability from your efforts then you need to think about your end customer.

If you are aiming for a market of people who don’t have much money then you can’t price your items that high. If you are looking to sell to a group of people that won’t get anything besides personal satisfaction from your product that drops the level of profit for you as well. The customer you are targeting will determine how profitable your item will be.

You want to look for markets where your future customer is going to gain high rewards from your products therefore they will be willing to spend more which increases your profit.

The most profitable items help someone earn money or achieve a goal especially if it financially benefits them more. An example of this is selling editable marketing materials to real estate agents. These products are profitable because you can charge more for them because the customer is willing to spend more to save time in creating these materials and will make money in their business from them.

Next let’s look at some of the most profitable product ideas and examples of each.  

6 Most Profitable Digital Products To Sell Online

If you are planning to add digital product sales to your online income streams, then you likely want to make sure you choose the most profitable digital products to sell so your time is used wisely. Below are my top picks for the best digital products to sell in 2020 and beyond. 

1. Ebook templates
2. Marketing templates
3. Swipe files
4. Spreadsheets templates
5. Online courses
6. Elements for creators 

These are incredibly profitable areas of digital products because they are things that help other people make money. Generally people with money or making money are the ones who are willing to spend more. 

There are dozens if not hundreds of other digital product ideas for things you could sell online, in fact I’ve shared more than 60 digital product ideas you can sell online!

Regardless of which digital product you decide to sell, your profits for creating a digital product will always be higher than a traditional product because you are creating a product once you can sell again and again.

Growing A Digital Product Business On Etsy

Etsy has downsides but it’s also an amazing place to build a business and earn an income.

If you want to grow a business selling digital downloads on Etsy I recommend my friend Sharon’s Etsy Entrepreneur course where she walks you through the process of setting up an Etsy shop and growing it to make $1,000 a month or more. She grew her Etsy store of digital downloads to more than $1,000 a month and has inspired many people to do the same.

Remember that your business growth will depend on being consistent and growing over time adding valuable products. For most of us we begin with one product and grow over time building on what works.

Over time you will learn tips and tricks to grow your digital products shop and find that success can be far beyond you expected when you focus on profitable digital products.