I recently read an article in the Post & Courier that had some interesting suggestions about how to use your tax refund this year to improve your credit score. These are the highlights:
- Set aside only a small percentage (i.e. 10%) of the refund as "spending" money.
- Set up an emergency fund - just in case you or your spouse are laid off. They recommend having 6 months to 12 months household expenses in this fund. You can put up to $5,000 a year ($6,000 is you are 50 or older) into a Roth IRA and invest it in a CD or money market mutual fund so that it is not vulnerable to stock market variations. And you can use this money for college, retirement or emergency without paying penalties...