Steps to Improve Your Credit
Your credit score uses historical information about your past use of credit to calculate the likelihood that you will pay back what you have borrowed, and pay it on time and in full. Your score can affect your life in many ways like whether or not you will be approved for a new credit card or even a mortgage loan on your first house. If your credit score has recently dropped or you feel there is room for improvement, follow our suggested steps to get your credit score back to good health!
Review Your Credit Report
It’s best to check your credit report on a regular basis. You can review all three major credit bureaus – Experian, Transunion, and Equifax – for free at AnnualCreditReport.com. Typically, everyone is entitled to one free copy of their credit report each year. However, since the pandemic began, there has been a rise in fraudulent activity which has also increased the need to regularly check your credit report. Now, you can check your credit report once a week which is still effective through April 2022. Checking your credit report will allow you to catch any errors such as incorrect balances that have been reported, closed accounts that are still showing as open, accounts you don’t recognize, or even unauthorized inquiries. Even the simplest of errors can harm your credit score, so be sure that everything is accurate and up to date. You can even file a free dispute online, over the phone, or by mail about any information that appears incorrect on your report.
Make Your Payments On Time
Making payments on any existing loans or lines of credit on time and consistently is a great way to add positive information to your credit report. This shows current creditors and potential lenders that you can manage debt responsibly. One way to ensure you’re making your payments on time is by setting up automatic payments. We are human and sometimes we are forgetful, but with automatic payments, you can make sure you don’t fall behind on your payments. If you are unsure about setting up automatic payments, consider setting calendar reminders on your mobile device to help you stay on track.
Pay Down Debt
How much you owe is huge factor in calculating your credit score. Substantial amounts of debt or carrying balances on credit account for long periods of time can negatively affect your score. If you pay down this debt, you will ultimately help improve your credit score. You can start by prioritizing your budget by looking at places you can cut back extra spending. This will allow you to redirect those funds and make extra payments on your credit accounts.
Watch How Much You Use
While paying off large amounts of debt can improve you credit score, making sure you don’t rack up too much debt can also help you keep a healthy credit score. We suggest keeping your credit usage between 30 and 40%. If you spend above this threshold, max out your credit cards, or carry high balances relative to your credit limit, you could cause your credit score to fall.
Be Patient
Although adding positive information and reducing the amount of negative information on your credit report will improve your chances at credit approval with the best loan terms – it won’t happen overnight. Your length of credit history affects your overall creditworthiness, as the length of time a borrower maintains an account indicates consistency in making on-time payments. The longer the history, the more confident lenders will be when evaluating your creditworthiness. While it may take time, taking action to improve your credit score can open up many possibilities.
Start improving your credit today! We are committed to helping our members build good credit and keep it there. We offer the financial tools that help our members succeed. Our credit cards and loans help you get what you need while also working to improve your credit. Plus, eligible members can view their FICO® Score for free within Digital Banking so you can always stay on top of your score.
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.