Do you love your credit score? Having a good credit score can save you money when you borrow for cars, homes, or even credit cards. A score increase of even 50 points can make a huge difference in your interest rate and payment amount.
It’s not always easy to talk about debt and credit, and it’s even harder to commit to an action. Thursday, October 22nd, is National Get Smart About Credit Day. Our friends at Greenpath Financial are committed to helping everyday people conquer their financial future. We’ll be sharing some of their tips and other resources to help kickstart your financial health journey.
Let’s take a look at steps to take to begin to improve your credit score:
- Know your spending. Tracking where your money is spent is the best way to see where your money is best allocated. Are you spending in excess on items and services you could go without for a short time? Consider reallocating those funds toward your debt!
- Pay on time. Your payment history makes up 35% of your score. If you’ve missed payments in the past, make it a point to get current and stay current. The longer you show a good history, the better your score will be.
- Bonus tip: Automating your payments ensures they’re made on time, and you avoid lost or stolen information from your mailbox.
- Keep your loan balances manageable. The second highest factor in determining your credit score is the amount of debt you owe and what kind of debt it is. Learn about “good debt” versus “bad debt.” “Good debt” means owing toward something that retains its value, such as a home. “Bad debt” means owing toward something that tends to depreciate, such as a clothing store card. Keep an eye on the amount of “bad debt” you have and make sure that it is within your means to pay it off in a reasonable amount of time.
- Improve your credit history. If you have been managing your credit for a short time, avoid opening accounts too rapidly. Too many new accounts can reflect poorly on your credit score. If you have had credit for an extended period, keep your old credit accounts open, even if you don’t use them. The older the accounts in good standing, the better your credit will look.
- Rate shop and don’t apply for too many accounts at once. If you are looking to obtain new credit, be sure to shop rates before applying. Too many credit inquiries within a short period can lower your score.
- Keep in mind the type of credit you are using. If you have more store cards than credit cards, this may adversely affect your score. It’s better to have 1 or 2 widely accepted credit cards than several store cards. It’s ok to open a store card for special financing options but make sure to pay it off as soon as you can.
The best solution is unique to your situation.
it’s best to talk to someone who understands the options available to you.
For more information on how to improve your score, visit with one of our financial experts by calling 406.651.AFCU (2328).
Our friends at Greenpath Financial are also always available to help! To learn more about how Greenpath has made a difference in so many financial journeys, visit their website here.