Credit score – even reading it might make you nervous. So many people have come into our branches asking about this mystery. What does it mean? How do I start it? How do I fix it? Before we give you some tips on how to boost your credit score, let’s explain what we are talking about.
- What is a credit report? It’s a report card of your history of paying bills and credit habits over a period of time. We like to compare it to homework.
- What is a credit score? It’s a “grade” given to you based on your history of paying bills and credit habits. It interprets how well you have done on “homework.” The higher the credit score, the better.
- What does it say about me? Lenders, insurance companies, employers, etc., look at your credit as a way to determine your trustworthiness. If your credit is high, you are more likely to get approved for a loan at a great rate, or maybe you won’t have to put a down payment on your new cell phone plan.
Now that you have a general idea of what we are talking about, here are some tips on how to boost that “grade” you are given based on your credit report.
- Pay your bills on time! – This accounts for approximately 35% of your score.
- Try to pay off your debt quickly, and keep your revolving debt below 30% of the available loan. Approximately 30% of your score is based on how much you owe to creditors.
- Get in the game – The length of your credit history contributes 15% of your score. If you decide you want to build credit, starting the process sooner is better.
- Have a healthy mix – The types of credit you have contribute to 10% of your score. Do you only have credit cards on your report? That appears as a red flag to lenders.
- Pay more than the minimum balance and do it early – This helps you pay down debt faster and reduces the amount of interest you will pay later.
What other tips and tricks do you know of to keep your credit score up? Share them in the comments below.
PS – Click here to check your credit report and learn more about credit reports and scores.