Unlocking the door to your financial freedom begins with one key element: managing your credit score. Whether maintaining your credit, building it from the ground up, or rebuilding it after your score has taken a hit, managing your credit score is a vital aspect of your financial well-being. Here are 5 simple ways to help boost your score:
1) Avoid Missing Payments. Your payment history is one of the most important factors in determining your credit scores, and having a long history of on-time payments can help you achieve an excellent score. To do this, you’ll need to make sure you don’t miss loan or credit card payments by more than 29 days—payments that are at least 30 days late can be reported to the credit bureaus and hurt your credit scores.
TIP: Setting up automatic payments for the minimum amount due can help you avoid missing a payment (as long as you’re careful not to overdraft your bank account). If you’re having trouble affording a bill, reach out to your credit card issuer right away to try and discuss hardship options. Staying on top of accounts that don’t generally appear on your credit reports (gym memberships and subscription services, for instance) can also be important. The on-time payments might not help your credit, but the account being sent to collections could still cause your scores to dip.
2) Catch Up on past-due Accounts. If you are behind in paying your bills, bringing them current could help. While a late payment can remain on your credit report for up to seven years, having all your accounts current can be good for your credit score. Additionally, it stops further late payments from being added to your credit history, as well as additional late fees.
3) Pay Down Revolving Account Balances. Even if you’re not behind on paying your bills, having a high balance on revolving credit accounts can lead to a high credit utilization rate and hurt your scores. Revolving accounts include credit cards and lines of credit, and maintaining a low balance on them relative to their credit limits, can help you improve your scores. Those with the highest credit scores tend to keep their credit utilization ratio in the low single digits.
4) Limit How Often You Apply for New Accounts. While you may need to open accounts to build your credit file, you generally want to limit how often you submit credit applications. Each application can lead to a hard inquiry, which may affect your scores a little, but too many multiple inquiries can add up and have a compounding effect on your credit scores.
5) Monitor Your Score with My Credit Rx. No matter what credit building stage you’re in, My Credit Rx can help you manage and maximize your credit profile. Take advantage of this free tool inside NIHFCU’s online banking and mobile app. In just seconds, you can view and track your credit score as often as you wish, without impacting your score. You can also access the new “Goals” feature to help you achieve a desired credit score.
By staying the course with these 5 management principles, you can help take control of monitoring your credit and work towards securing a brighter financial tomorrow. So, take charge of your credit journey today!
Resource:
experian
