The new year is a great time to check in with your finances and create new routines and habits. We’re looking at the foundations of credit scores and the surefire ways to improve and maintain a solid score. With a solid credit score, you have the power to borrow with favorable terms and rates.
Check Your Score
Your credit history influences your credit score. Your payment history, the credit you secured, and the amount are recorded in your past—behaviors like making on-time payments improve your credit score. Like late payments or bankruptcies, negative information brings your credit score down and hurts future credit inquiries.
Step one to improving your credit is to know exactly where you stand. You are entitled to a free copy of your credit report from all three major credit bureaus. We often recommend checking in with a different reporting agency every quarter. Checking quarterly allows you to identify and react quickly when and if fraud or credit reporting errors occur.
You can request your free credit reports here.
What Affects Credit Scores
- How much debt you carry – Paying off the credit you use each month helps improve that amount. By showing that you reduce debt each month, your score gradually increases over time.
- Reports to collections agencies – You should immediately report any inaccurate reporting to a credit agency. The sooner you resolve inaccuracies, the quicker your report is amended. You’ll want to obtain a letter from the collection agency once you can confirm the error and submit it to each credit reporting agency.
- The number of credit accounts – Opening and closing accounts may impact your score.
You can read more about what comprises your credit score here!
Prioritize Card Repayment For Utilization
One of the factors considered in your credit score is “credit utilization.” The amount of credit you have used compared to your total combined credit limit.
For example, suppose you have $10,000 in credit available and a balance of $5,000. Your credit utilization rate is 50% because you use half of the total credit you have available.
A general rule of thumb is to keep your credit utilization under 30%. A low utilization rate shows you’re using less than your available credit. That is generally interpreted as an indication of managing credit by not overspending and keeping your spending in check, helping you reach higher credit scores.
A higher score makes it easier to secure additional credit (auto loans, mortgages, credit cards, etc.) with favorable terms when you need it.
Automate Bill Payments
The single best thing you can do for your credit is to consistently pay bills on time and in full. Setting up automatic bill payments is the best way to ensure this happens every time. Automatic payments remove the risk of forgetting and lighten the load of manually paying your bills.
Online Bill Pay is so valuable that we love recommending it to anyone looking to simplify their banking experience. As an Altana member, you have access to online bill pay (for free!) and can manage your payments with the click of a button.
Transfer high rate balances to a low rate Visa.
The Holidays are over, and you may be looking at a daunting credit card statement. If you’re looking to tackle that debt with favorable terms and a rate right for you, transfer your high rate balance to a Visa card that gives you back your purchasing power.* Thinking this is the move for you? Learn more on our website and decide for yourself!
When you’re ready to make the switch or talk to someone about an action plan, we’re prepared to help!
*O.A.C. – Based on approved credit.
To learn more about making your credit score work for you, visit this helpful resource.