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And the credit award goes to…

Dawn Papandrea

February 26, 2016

With the Academy Awards still in the news, it made us realize that receiving an Oscar nomination is a lot like finally achieving an excellent credit score. It takes a lot of hard work and commitment to really dazzle your audience — whether it’s moviegoers or a lending institution or creditor.

Here are some award-worthy techniques to employ, and warnings to heed when deciding that your credit deserves red-carpet treatment.

Best picture
Nothing says best picture quite like a squeaky-clean credit report — and there’s a whole cast and crew of financial activities that contribute to that victory. It goes beyond just your credit card, mortgage and loan payments, says Sean Stein Smith, a member of the American Institute of Certified Public Accountants.

“It’s watching out for things you might not think would show up on your credit report, like unpaid medical bills.” Or more important — catching fraudulent activity or identity theft before it can wreak havoc on your finances.

Award-winning advice: To earn a best credit picture nod, you have to make sure you appeal to your audience. That starts with regular reviews of your credit reports.

“People are legally entitled to a free credit report from each of the bureaus (Experian, Equifax and TransUnion) once per year,” says Smith. Go to annualcreditreport.com, and pull one per quarter, he advises, so you always have your eyes on your credit bureau box office standings.

Best supporting actor/actress
Supporting someone by co-signing a loan or adding them to your credit card account might seem like a noble thing to do, but it could become a financial knockout punch reminiscent of 2016 nominee Sylvester Stallone’s character, Rocky.

“Most people are either on their phone, tablet or laptop anyway, so it’s convenient to get off of Facebook and check your finances for five minutes a day.”
— Sean Stein Smith,
a member
of the American Institute
of Certified Public Accountants

That’s because as a co-signer or by granting access to your credit card, you are on the hook for missed or late payments, and any such negative activity will affect your credit score.

Award-winning advice: Before you say yes, you need to make sure that you’re comfortable with taking on a supporting role by asking two important questions, says Smith.

“First, you need to figure out why you’re being asked to co-sign. If it’s because the person has poor credit, it could indicate a track record of money mismanagement. Or, the request might come from a young adult whose credit history is lacking, and therefore needs someone to assume some of the risk,” says Smith, who is a member of AICPA’s National CPA Financial Literacy Commission.

“Which brings you to the second big question: ‘Does the person have the means and a plan to pay back the money they borrow in a timely manner?” If you have any reservations or doubts, it’s better to politely decline.

Best screenplay
From a credit perspective, screenplay is all about leveraging mobile technology to help manage your financial plot.

“Many people are paid via direct deposit, they shop online, and they are using credit and debit cards, so it can be abstract and difficult to track money coming in and going out,” says Smith. And that’s a big part of why people get into debt, he adds.

Award-winning advice: Apps and technology can make it easy to pinpoint exactly where your money is going, and set alerts when new transactions are made or bills are due.

“Most people are either on their phone, tablet or laptop anyway, so it’s convenient to get off of Facebook and check your finances for 5 minutes a day,” says Smith.

Best score
While it’s a no-brainer that an 850 FICO score wins every time (sort of like Meryl Streep), maintaining a score of 740 and above will earn you a nomination in the best credit score category, says Denise Winston, founder of Money Starts Here, a financial education company.

Right behind paying your bills on time, the second most significant factor affecting your FICO score is your debt utilization  (that’s the amount you’re borrowing in relation to the amount available). In other words, you should keep your balances low to maximize your score, and in turn, qualify for better credit terms.

“The crazy thing about credit is you have to look like you don’t need it or want it, in order to get more of it,” she says.

Award-winning advice: Take a look at how much revolving credit you have, and aim to keep your utilization under 30 percent or lower at all times, says Paul Tarins, president and founder of Sovereign Retirement Solutions.

“Pay your [credit] lines down and use them very little for a couple of months, and your score will improve,” he says.

“The crazy thing about credit is you have to look like you don’t need it or want it, in order to get more of it.”
— Denise Winston, founder
of Money Starts Here

Best actor/actress
As most actors will tell you, all it takes is one great starring role for the offers to start coming in. However, getting to that point can require years of hard work and sacrifice. The same can be said of credit.

“If you get educated and prove yourself with your finances, lenders will fight over you and you can have anything you want,” says Winston. Well, almost anything. And by anything, that includes the best interest rates and terms, perks and rewards. And that opens the doors to cards for excellent credit.

Award-winning advice: Your credit reputation can also impact how much you make, where you live, what kind of car you drive or even who you partner up with, says Winston. That’s because, she explains, prospective employers, landlords, auto companies and prospective life partners will all inquire about your credit history at some point. You don’t want to be rejected because of a lapse in judgment.

Best director
If you want to really take charge of your finances, you need to be proactive and take a seat in the director’s chair. Otherwise, going over budget can lead to late payments and poor credit decisions, and ultimately, turn you into a financial flop.

“You have to start telling each dollar what to do, and know that each dollar is working for you,” says Winston. “If you are not the one directing where your money goes, someone else will because everyone wants a piece of your money,” says Winston.

Award-winning advice: Until you yell “action,” and start micromanaging your cash flow and bill payments, says Tarins, you’re putting your finances in jeopardy. That’s because overextending yourself and not squirreling away any savings will lead to more reliance on high-interest credit. That will lead to even higher bills, and the cycle of debt will continue — sort of like a string of bad horror movie sequels.

Before that happens, try some different takes to improve the scene. “Track everything you’re spending and all of your income, and look for ways to improve,” he says.

If you don’t want to get left out in the cold like Best Actor winner Leo DiCaprio in “The Revenant,” or feel like you’re millions of miles off track like Matt Damon’s poor astronaut character in “The Martian,” it’s time to put the Best Picture winner “Spotlight” on your personal finances. Before you know it, you’ll be a credit superstar.

SEE ALSO: 16 ways to improve your credit in 2016

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