By Hughes Federal Credit Union
A good credit score can help you get a better rate on a loan, help you rent an apartment, and in some cases, your credit history can even affect your employment opportunities. If your score could use a little help, here are a few tips to up your number.
Check your credit report
Start the repair process by looking at your credit report. You are entitled to one free credit report every 12 months from each credit bureau (Experian, TransUnion, and Equifax).
You can get your free credit report by visiting AnnualCreditReport.com. Your credit report will contain all of the credit activity reported to each of the three credit bureaus for the past ten years. Look for errors. If you don’t recognize a listing or see that an error has been submitted, contact the credit reporting agency and dispute it.
Pay bills on time
Missing or making late payments can significantly impact your score, staying on your credit report for up to seven years. Your credit score is made up of many factors but the biggest and most important component is your payment history which makes up 35% of your score. Help yourself remember to pay on time by setting up autopay and never miss a payment again.
Keep your credit utilization low
Along with payment history, your credit utilization shows lenders how financially responsible you are. A debt-to-income ratio compares your available credit and the amount you’ve spent (your balance). The goal is to keep your utilization at 30% or less. The lower, the better.
Pay down debt
While there are several ways to pay down debt, two popular methods are the snowball method and the avalanche method. The snowball method centers around paying off small debts first and the avalanche method focus on tackling high-interest debt first. If your interest rates are high, you may want to consider consolidating your debt or transferring your balance to a card with a better interest rate.
Become an authorized user
If you know someone that has a good credit history and high credit limits, you could ask them to become an authorized user on their accounts. This “piggybacking” method allows the authorized user to “borrow” the primary account holder’s good payment history without having to worry about making payments. The primary holder’s credit limit is also added to your credit limit and will improve your debt-to-income ratio.
Check your score regularly
Staying on top of your finances will help ensure you don’t miss anything that could be negatively impacting your score. Utilize credit score tools like Hughes’ CreditSmart which will allow you to get a breakdown of your score according to all of the scoring factors: payment history, credit utilization, debt owed, new credit, length of credit history, and credit mix. You can also set credit monitoring alerts to help you address any changes in your score.
Need help getting back on the right track? We can help. Visit HughesFCU.org to learn more.
