How to Improve Your Financial Health
- One way to improve your financial health is to learn the basics about finance.
- Managing your finances and credit is easier once you understand your credit scores, how to budget, and how to save.
- If your debts are unaffordable, consider debt relief for a financial reset.
Table of Contents
No one is born a money expert. Every person with confidence and expertise started with the desire to understand how money works and the commitment to make positive changes.
The human financial condition responds to consistent, thoughtful action. Small adjustments in how you budget your money and manage your credit could create remarkable transformations over time. The strategies ahead will show you exactly how to harness the power.
This isn’t pure theory. These are practical steps that real people use every day to build the financial lives they want. Take a look.
Know How Credit Scores Work
Your credit profile is one indicator of your financial health. Most people know that a higher credit score means they’ll qualify for loans, credit cards, and mortgages more easily and at lower rates. But many don't know how credit scores are calculated.
Lenders use credit scores to determine how likely you are to pay back a loan. The most widely used credit score is the FICO Score, developed by the Fair Isaac Corporation. All three credit bureaus—Experian, Equifax, and TransUnion—use this scoring system to determine a score.
“FICO Score” and “credit score” might be used interchangeably, but they’re not precisely the same thing. You have other credit scores besides your FICO Score. FICO is just one kind.
The credit scores we rely on most often range from 300 to 850. Your score is based on how you’ve handled credit accounts in the past. Here is the breakdown of how credit scores are calculated:
| Factor | What could work in your favor | What could work against you | Weight |
|---|---|---|---|
| Payment History | Consistently paying bills on time | Delinquent accounts or missing payments | 35% |
| Amounts owed | Low credit card balances | High credit card balances | 30% |
| Length of Credit History | Longtime accounts | New accounts | 15% |
| Credit Mix | A variety of credit accounts, such as student loans and credit cards | Little or no credit variety | 10% |
| New Credit Applications | Applying for credit sparingly | Applying more often | 10% |
You can request free weekly copies of your credit report from all three bureaus at annualcreditreport.com. You'll first need to answer some identity verification questions to prove who you are. Then, you can review the information on the reports, make sure it’s correct, and dispute any false information.
If you do see inaccuracies on any of your credit reports such as a wrong address, missed payment, or incorrect outstanding balance, use the information on their website to contact the credit bureau and ask them to review the mistake. You should also contact the financial institution associated with the account to let them know about the error.
Under the Fair Credit Reporting Act, credit bureaus must investigate any disputed items and remove them if they are incorrect.
It’s a good idea to review your credit reports regularly. Aim to do this at least once a year. You may want to check more frequently if you've been the victim of identity theft or if you plan to apply for credit soon and want to know where your credit stands.
Make a Budget
Evaluating your financial situation is a great way to make sure you’re practicing good habits that could help you get ahead. You don’t need an expert to review your personal finances to get started. All you have to do is create a budget.
First, make a list of all your monthly expenses, such as housing, transportation, food, utilities, insurance, childcare, and so on. Then, subtract your expenses from your monthly income after taxes. If you have money in your budget after paying all your expenses, you’re on the right track with your personal finances.
You can then decide where any extra money goes—for example, to savings, retirement, or to pay off your debts.
If you find that you run short on money or you rely on credit cards to fill the gap between your income and expenses, it’s time to adjust.
There are two ways to find money in your budget. You can spend less or you can earn more.
If a pen-and-paper budget or a budgeting spreadsheet doesn’t work for you, consider downloading a budgeting app. These can do the math for you. Many apps link with your existing financial accounts to keep track of your transactions automatically. They’re also good for setting and meeting goals, and showing you progress. This could make your budget a little easier to stick with.
Pay More than the Minimum
Making the minimum payment on your credit card is key to avoiding late fees and negative marks on your credit score. But it’s not a good strategy for getting rid of debt. Minimum payments are designed to keep you in debt for a long time.
Always pay more than the minimum if you're able to. This could help you reduce how much you pay in interest charges over time and move you out of debt more quickly.
Paying more than the minimum could also help you lower your credit card balance, which is a big factor in your credit score.
Credit utilization is your credit card balance compared to the credit limit on the card. If you make the minimum payments but keep charging new purchases to the card, your credit utilization might not go down. Worse, it could go up. Paying more than the minimum can help you get your balance moving in the right direction: down.
Start Your Emergency Fund
An emergency fund is the protective shield between you and debt. Having money in savings for an emergency could mean you avoid adding to your debt when an unexpected expense comes up. And unexpected expenses come up for everyone. Saving even a few dollars out of each paycheck could save you from a huge financial headache.
A high-yield savings account is the best place to keep emergency savings. Look for an account that pays interest and doesn’t charge a monthly maintenance fee. Consider keeping your everyday checking account and your emergency savings account at different banks, which could help you avoid the temptation to dip into your savings. Set up an automatic funds transfer from your checking account to your high-yield savings account each payday to make saving easier.
Give Your Financial Health a Boost
If you’re struggling with debt or worried about falling behind on payments, take action beyond simple budgeting strategies. Freedom Debt Relief is here to help you understand your options for dealing with your debt, such as our debt settlement program. Settling a debt means getting your creditor to agree to accept less than the full amount, and forgive the rest. It’s something creditors may be willing to do if you can’t afford to fully repay your debts.
Our Certified Debt Consultants can help you find a solution that will put you on the path to improve your financial health. Find out if you qualify.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during August 2025. This data highlights the wide range of individuals turning to debt relief.
Credit card balances by age group for those seeking debt relief
How do credit card balances vary across different age groups? In August 2025, people seeking debt relief showed the following trends in their open credit card tradelines and average credit card balances:
Ages 18-25: Average balance of $9,117 with a monthly payment of $270
Ages 26-35: Average balance of $12,438 with a monthly payment of $371
Ages 36-50: Average balance of $15,436 with a monthly payment of $431
Ages 51-65: Average balance of $16,159 with a monthly payment of $533
Ages 65+: Average balance of $16,546 with a monthly payment of $500
These figures show that credit card debt can affect anyone, regardless of age. Managing credit card debt can be challenging, whether you're just starting out or nearing retirement.
Credit card debt - average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average credit card debt for those with a balance was $6,021. The percentage of families with credit card debt was 45%. (Note: It used 2022 data).
Unsurprisingly, the level of credit card debt among those seeking debt relief was much higher. According to August 2025 data, 88% of the debt relief seekers had a credit card balance. The average credit card balance was $16,101.
Here's a quick look at the top five states based on average credit card balance.
| State | Average credit card balance | Average # of open credit card tradelines | Average credit limit | Average Credit Utilization |
|---|---|---|---|---|
| Oklahoma | $15,098 | 7 | $24,102 | 77% |
| South Carolina | $15,042 | 9 | $28,791 | 76% |
| Ohio | $14,642 | 9 | $27,261 | 76% |
| Alaska | $21,166 | 8 | $25,731 | 75% |
| Georgia | $17,017 | 8 | $26,156 | 75% |
The statistics are based on all debt relief seekers with a credit card balance over $0.
Are you starting to navigate your finances? Or planning for your retirement? These insights can help you make informed choices. They can help you work toward financial stability and security.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Kailey Hagen
Kailey is a CERTIFIED FINANCIAL PLANNER® Professional and has been writing about finance, including credit cards, banking, insurance, and retirement, since 2013. Her advice has been featured in major personal finance publications.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How can I improve my financial health?
Improving your financial health starts with understanding the factors that influence it, like your credit score. Sticking to a budget is also helpful, as is building an emergency fund to protect yourself against unexpected expenses. Be patient! It takes time and consistency to build up your savings or make a noticeable change to your credit score—but you’ll get there if you keep plugging away.
How do I rebuild my financial life?
Rebuild your financial life with a few systematic steps. Start by taking stock of where you're at right now. Jot down your bank account balances and how much debt you have. Check your credit scores and identify any issues, such as late payments, that may be hurting you. Then, decide on a list of priorities. For instance, you might want to work on your credit score. Next, come up with actionable steps, like making the minimum payments on your card each month, to make your goal a reality.
What are the top three financial habits?
Three of the most impactful financial habits are:
Build and maintain an emergency fund
Pay your bills on time
Stick to a budget
Debt Solutions
Debt Solutions
