by Chelsea Springli 
A savings account is great for life’s curveballs, but don’t rely only on it to be your safety net. Your credit score will provide the security you need in an emergency. With a good credit score, you can get low interest financing options with quick approval. Here are a few tips to help build up your credit score and create a safety net.
Credit Cards
In an emergency, your credit cards can serve as secondary emergency funds. Thus, they become a credit safety net. Using your available credit card balances can help you with avoiding depleting your savings account. Keeping a decent chunk of your spending limit available will not only offer you a good lifeline, but can also boost your credit score. Plus, a good credit score can earn you the best rates.
Be careful to not rely on your credit card for purchases that you can’t afford to pay for in full when you receive your monthly bill. This will create a trap of high interest fees. Also, a full credit card is the opposite of a safety net and will hinder you in an emergency.
Personal Loans
When you need quick, extra cash, a Personal Loan, might be a good choice. They are good for moderate-sized projects and qualified borrowers don’t need collateral. A good credit score gives you the opportunity to quickly get a personal loan with no collateral and just your signature. Plus, if you pay it back on time every month it’ll continue to help build your credit.
Before applying for a Personal Loan, make sure you can afford your minimum monthly payments. Personal Loans often have moderate interest rates due to the lack of collateral. This can hurt your finances and credit score if you can’t afford the payments.
Home Equity Loan
If you own your own home and have available equity (meaning you owe less than your home is worth) you can take out a Home Equity Loan. This is a one-time lump sum loan, usually of a sizable amount. This can be good for big projects, like remodels, additions, building a shop, or paying off your other higher-rate debt.
When you borrow a Home Equity Loan, it’s crucial that you make your minimum payments on time. Your home serves as the collateral, meaning that your home can be repossessed by the lender if you fail to make your payments. Since financial institutions don’t want to take your home, budget for how you’ll repay the loan before you take the funds.
Home Equity Line of Credit
These are much like a Home Equity Loan. The difference is instead of taking out one big lump sum, you can use the line of credit like a credit card. You can make purchases, pay the balance down each month, and then make new purchases. This is great for regular projects or sizable emergencies.
Similar to a Home Equity Loan, your home is the collateral of this loan. This is why borrowers can often get a low interest rate. It’s crucial that you make your minimum payments on time. Plus, leaving and freeing room with your Home Equity Line of Credit creates a safety net to use during emergencies.
Build Your Safety Net
By using your available credit options, making payments on time, and paying your debt off, you are continuing to build your credit score, which in turn, gives you a safety net to be able to borrow money in the future. Plus, having an open line of credit or credit card with ample space creates a safety net to fall on without having to apply for another loan.
