Your credit score has one of the largest impacts on your financial health. Looking to purchase that new car or fire up that new cell phone account? Chances are your credit score will be checked before you drive off the lot or make that first call. Credit scores and reports provide a snapshot of your financial habits and overall historic financial “health” that many businesses and service providers will review to get a sense of your creditworthiness.
Credit scores can range from the low 300’s to 850. In basic terms, the higher the number, the better your overall credit score. The higher your score, the more flexibility you’ll have in your financial options, which may include lower interest rates on loans.
Here are 8 ways you can improve your credit score.
1) Always pay your bills on time – This may sound simple, but it is one of the best and easiest ways to maintain or improve your overall credit score.
2) Pay at least the minimum due – Consistent payment history and always paying the minimum due, makes up a large portion of your credit score. Always pay more than the minimum due if possible (see #4).
3) Don’t use up all your available credit – People that max their credit limits are at higher risk for lower scores. A general rule of thumb is to only use 30% or less of the available credit.
4) Pay off your credit card balance – Lowering the overall amount of money you owe on a credit card will impact your overall credit score. Try to pay off those cards each month or at least pay more than the minimum amount due if possible.
5) Put payment due dates on your calendar – If you want to ensure that you’re not making late payments, it’s best to schedule those payment dates on your calendar. It’s a quick and easy reminder that will help your credit score in the long run.
6) Set up automatic payments – Setting up automated credit payments takes the worry out of missing a payment. Just make sure your account has enough funds each month to automatically make your payments.
7) Build your credit history – You have to get credit to build credit. There’s no easy way around this. A person with a long credit history is considered less risk than someone who recently began using credit. Start with something small, use it sparingly and pay it off each month.
8) Talk to a professional – Contact a First Security Bank consumer lender to learn more about the Credit Builder program and how it can help you.
If you want to learn more about the importance of credit scores as well as other financial literacy topics, we encourage you to visit First Security Bank’s free Financial Foundations courses here.