6 Tips for Creating a Spending Plan That Helps Your Credit Score

creating a spending plan

Creating a sensible spending plan is one of the best ways a prospective borrower can have a positive impact on their credit score and get approved for a loan — but many people don’t budget their money. According to a Debt.com survey, 31 percent of Americans polled did not follow a budget, despite 97 percent of women and 98 percent of men admitting that “everyone” needs one.

Why is there this disconnect between what we think we should do and what we actually do? While most respondents pointed to a lack of significant income as the primary reason for not budgeting, 21 percent of women and 29 percent of men said budgeting is simply too “time- consuming” to integrate into their spending habits. To make things easier, we’ve compiled some tips to help you create a spending plan that will have a direct impact on your credit score.

1. Track Money Coming In

Before you know how to spend your money wisely, you must account for how much money is coming in. Whether you use a simple Excel sheet or another money manager system, make a list of all your take-home income for a typical month. Be sure to list the net amount, which is the amount after taxes and other withholdings. If you are a freelancer or work on commission and your income varies each month, list your average monthly income. Factor in all money coming in — income, side hustles, benefits, child support, etc.

2. Itemize Monthly Expenses and Pay on Time

Your payment history accounts for approximately 35 percent of your score. Late payments hurt your score, while consistently paying your bills on time helps it. To ensure you don’t miss a payment, list your monthly expenses. What are examples of monthly expenses? We suggest making two columns: one for your debts, and the other for your basic living expenses. Since debts — from car loans to credit cards to student debt — tend to have higher interest rates, make a plan to pay these first and try to pay more than the minimum payment so you don’t end up just paying interest. Then list your basic living expenses. These tend to include rent/mortgage, utilities, phone, internet, gas, insurance and groceries. Don’t forget to also include eating out and entertainment.  

Once you know how much money is coming in and how much money is going out, crunch the numbers by subtracting the total monthly expenses from the total monthly income. If you have money left over, put it aside for savings. If there is a negative balance, you are overextending yourself. 

3. Take Advantage of Autopayments and Micropayments

To help you stay on top of your financial obligations and dodge late fees, take advantage of autopay options. You can usually set these up through creditor websites/apps or directly through your bank. Micropayments, which are small payments made throughout the month, are another way you can pay down debt in a more manageable way. Just be sure you have enough money in your bank account before you set up autopayments, so you don’t run into overdraft fees. 

4. Make Room for Emergency Savings

According to FINRA’s National Financial Capability Study, 46 percent of Americans lack a rainy day fund to cover expenses for three months. This means that in the unforeseen case of emergencies such as sickness, job loss, or economic downturn, they are likely to turn to high-interest credit cards, or fail to cover their expenses adequately, setting themselves up for credit troubles. One way to inject money into your emergency savings is to put your tax refund or year-end bonus in a savings account.

5. Seek Opportunities for Increases and Decreases

Do you really need that expanded cable package or that afternoon Starbucks trip? Are there any items stowed away in your garage that you can sell? Any side hustles that you may find fulfilling? Another way to create emergency savings is to look for opportunities to increase your income and decrease your expenses.By looking for novel ways to increase your income and decrease your spending and/or debt, you can improve your financial standing and emergency savings, while also improving the future of your credit score.

6. Use the SmartCredit System

The SmartCredit system is designed to help you control your future credit score with simple tools that allow you to track your scores, your spending and your financial obligations. With an easy-to-use interface and an actionable plan to pay down debt, SmartCredit helps you use your money wisely and improve your score in just 120 days* so you can be in the best shape possible when you decide to apply for a loan.

Learn more about how SmartCredit can help you devise a money management plan that works for you. 

*This feature unlocks if you have negative credit data.


  1. https://www.debt.com/research/best-way-to-budget-2019/
  2. https://www.bills.com/credit/credit-answers
  3. http://www.usfinancialcapability.org/results.php?region=US#planning-ahead
creating a spending plan

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