happy group of young people spend time together after improving their credit scores

7 Ways to Improve Your Credit Score

You’ve been working on it for a while now: Attempting to build a strong credit score to help with your financial future. So where do you go next?

Let’s Better Your Credit Score, Together.

Your credit score has a big impact, especially when it comes to making a big purchase.

Whether you’re shopping for a car, buying a home or opening a new line of credit, financial institutions and other companies use your credit score as a snapshot of your dependability. In other words, your score determines:

  • Whether you qualify for a loan

  • What interest rate you’ll be charged

  • The maximum amount you can borrow

Of course, the better your score, the better your rates! Even small differences can save you thousands in interest over the life of a loan.

How to Improve Your Credit Rating.

From setting up automatic payments to monitoring your credit reports, here are seven simple ways to start building and improving your score:

  1. Always Pay Your Bills on Time

    Make it a habit. Honestly, it’s the single biggest way to increase your credit rating. Even one payment that’s 30 days late can bring down your score, and it stays on your credit report for up to seven and a half years. Late payments can result in additional late fees or penalties, too.

  2. Build Your Credit History

    Credit cards can be a valuable way to build your credit history, if you use them carefully. Research and compare your options, since different cards come with different rates, features, fees and reward programs like travel discounts and cash back. It depends on what is best for your lifestyle!

Pro Tip:

Thinking about opening a new credit card but still have an old one or two? Closing an old card with a high interest rate or an annual fee might be the best choice for the long haul, but it will also decrease the average age of your accounts – which can negatively impact your credit score, at least for a short time. In other words, consider the pros and cons first. It may be worth still using your oldest credit card a couple times a year, just to keep it active.

  1. Pay Off Your Credit Cards Every Month – or at Least the Minimum Due

    Credit cards are convenient, but they also make it easy to overspend. Try to pay your cards off every month, or maintain a low balance to avoid hefty interest fees.

  2. Pay Down Debt Using the “Avalanche” or “Snowball” Methods

    These are two common approaches to consider, depending on your situation:

    • Avalanche: Focus on paying off your highest interest rate debt first while chipping away with the minimum on your other debts.
    • Snowball: Pay your smallest debts first. Since you’ll be able to pay off those lower balances faster, you’ll soon be able to make larger “snowball” payments on your remaining debt.
  3. Set Up Auto-Pay

    Setting up automatic payments can be a lifesaver, and it’s never been easier. Online bill pay is a great way to stay organized, pay your bills on time and have more control over your finances. Additionally, you may be able to request a different monthly due date for your home, auto or student loan to ensure automatic payments are in sync with your paycheck schedule.

  4. Put Due Dates on Your Calendar

    Don’t have the option to make automatic payments with some bills? Try setting calendar reminders on your phone instead. Start by making a list: cell phone, streaming services, utilities, gym memberships – you name it. Then add the payments to your calendar as recurring events.

  5. Review Your Credit Report

    Last but not least, review your credit history to fix any mistakes and make sure there’s no suspicious or unexpected activity. You can request a free credit report once every 12 months from all three major credit bureaus (Experian, Equifax and TransUnion) at AnnualCreditReport.com. It really is free, so take advantage of it – especially if you’re planning to make a big purchase in the next six months.

Remember, some small changes will pay off quickly. Other good habits will make a bigger impact over time. Whatever’s next on your list of financial goals, stop by one of our convenient locations and talk with a personal banker. We’ll be happy to help!