The Kitchen Table

Credit is Definitely a Marathon

  • February 12, 2016

The first thing you should know about credit is that it takes years to establish and only months to destroy. Life is unpredictable, it’s important to consider your long term goals with credit and to make sure you have something in the bank for a rainy day. An unexpected injury or job loss, anything that causes a lack or loss of income can wreak havoc on your credit. That is why it’s so important to set up an “Emergency Fund”.

Some experts suggest your Emergency Fund should be equivalent to 3 months’ salary, others will tell you 6 months’ salary. How BIG or how small your emergency fund is shouldn’t be the main focus. Having an emergency fund should be the priority! Set an attainable goal, $500…$1000?? Just pick an amount. With your goal in mind, open an FDIC insured savings account, than actively deposit a set dollar amount into this account each payday until your goal has been reached. Only pull money out of your Emergency Fund if you have an emergency; your car breaks down, or you miss a week of work. And be sure to start replacing those spent funds as soon as possible.

Thirty-five percent of your credit score is determined by whether or not a person pays his or her bills on time. That is why having an Emergency Fund is so vital to good credit. The advantage of the Emergency Fund is that it creates certainty. That means that the next time you need to borrow money to make a big purchase, you can!

Remember: today’s unforeseen predicament can have lasting harmful effect on your future credit prospects. Have a plan and start establishing an Emergency Fund right now.

*Employees of LPI Loans and our affiliates are not attorneys and LPI Loans DOES NOT provide any legal advice and users of this web site should consult with their own attorney for legal advice.


Thank you Lloyd’s Plan, Inc. for your support. We love your service and convenience with payments!
Julius H. IA
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