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5 Tips for Improving Your Credit Score

Improving your credit score is important if you ever want to purchase a home or a car, and potential employers may check your score before a hiring decision. But did you know your credit score can also impact your access to necessities like rent, utilities, or phone service? People with low credit scores often pay higher rates for these services – if they manage to secure them at all.

If your score isn't up to par, there are several steps you can take to improve it.

Tips for Improving Your Credit Score

1. Review and manage your payment history.

Your payment history is one of the largest contributing factors that makes up your credit score.  Missing payments or making late payments has a huge negative impact on your overall score, so make sure you make all payments on time.

You also should review your credit report for reported missing payments.  If there are incorrect entries on your credit report, contact your creditor to have the account corrected.

Negative activity like late payments are not reported until you're at least 30 days past due, so don't forgo or put off a payment completely just because you're late.

2. Monitor your credit usage.

More important than the overall amount of credit extended to you is the amount of that credit you're actually using.  Experts recommend utilizing no more than 30% of the credit available to you for the best overall impact to your score.

If you're currently above the 30% threshold, halt credit card spending and create a repayment plan to reduce your balances.

3. Don't close your old accounts.

The age of your credit history plays a role in your credit score. Closing an old account could negatively impact your score in two ways.  First, it could reduce the age of your credit.  Secondly, it could reduce the amount of credit extended to you, which impacts your credit usage ratio. If you're newly establishing credit or rebuilding credit, consider leaving all lines of credit open.

4. Pay off medical collections.

No one plans an extensive illness or a trip to the hospital, so people are often unprepared for the expenses associated with medical treatment.  This results in unpaid medical bills being referred to collections and negatively impacting your score.  When medical debts are paid, whether directly to the provider or the third party collection agency, the debt is removed from your credit report.  This can have an important role in improving your credit score.

5. Apply for credit wisely.

Each time you apply for a credit card or loan, an inquiry is reported and your score could be lowered.  Inquiries can impact your score for 12 months from the inquiry date. It’s important to have lines of credit, but apply for them wisely.

Contact Our Credit Union for Additional Suggestions

Managing your credit and improving your credit score with these tips is a smart move toward a healthy financial future. However, these are only a few of the ways you can improve your credit score. Contact us through our Georgia Heritage FCU website for additional tips and loan information.

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