Whether you’re building your credit or trying to move it from “very good” to the “exceptional” range, improving your credit score is never a bad idea.
Here are some steps you can take right now to help develop this important financial measurement:
1. Know what’s working against you: Review your credit reports to find out what’s weighing your score down. While factors like the age of your credit accounts cannot be changed immediately, perhaps you’re simply unaware of the impact of a late payment.
2. Limit how often you apply for new accounts: When you’re making a big purchase at a store and see the 20% off when you open a credit card sign, it’s tempting. Sometimes it will make sense, but most of the time there’s more cons than pros. Limit how often you open a credit card, whether it’s a store credit card or a traditional credit card.
3. Keep your credit utilization under 30%: One of the biggest factors impacting your score is credit utilization – the portion of your credit limit that you’re using at any given time. The lower percentage the better, but aiming to keep your outstanding balance under 30% of your total credit limit is a good goal to aim for.
4. Know when your payments are due: Payment history is the most heavily weighed factor, making up 35% of your credit score. Set due date reminders for all your debts – car, insurance, mortgage, student loan, etc. Pro tip: Setting up automatic bill payments are a fool-proof way to ensure everything gets paid on-time!
5. Be an authorized user on someone else’s credit card: If you don’t have much credit history of your own, this may be a good option for you. Being an authorized user will allow you build credit without having to apply for a brand new account and, assuming they are financially responsible, you can benefit from the primary cardholder’s behavior.
Most importantly, be patient. Once you start taking steps to build your credit score, it may take several months or even years to see an impact. Follow these tips, stay consistent, and your credit score will start climbing sooner than you know it!
Penn Community Bank, together with SavvyMoney, gives you the tools and insight you need to understand, track, and improve your credit right from online or mobile banking. For more information, click here.