Tips to improve your credit score | Company

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Credit scores range from around 350 to almost 900 and the higher the better.

Whether you’re trying to establish your credit score as a young adult, want to improve your score, or simply maintain it, it’s important to understand the factors that make it up and monitor your score.

Simply put, a credit report is a collection of information about you provided by the financial institutions you have borrowed money from over time. There are three main credit bureaus where this information is reported: Equifax, Experian and TransUnion.

Some of the data that credit bureaus provide to potential lenders includes your name, address, date of birth, and social security number. Details of any outstanding loans with financial institutions and records such as judgments or bankruptcies will also appear.

Good credit, showing that you repaid your loans on time, usually stays on your credit report for seven years. Charges or when you don’t pay for something will also only stay on your report for seven years. Utility bills are generally not included in your credit report.

The credit report is a snapshot of your financial situation at any given time.

Here are some tips to help you start building or improving your credit score:

Check your score annually: Federal law allows you to request a free copy of your credit report every 12 months. Go to annualcreditreport.com to get yours and see how your score stacks up. You should check it for any errors and contact the credit bureaus as needed.

Make payments on time. This is very important for maintaining or developing your credit history. Try to make your payment by the due date each month and certainly within the grace period before late fees are charged and a late payment is reported to the credit bureaus.

Avoid maxing out credit cards. If you’ve reached the limit on your existing lines of credit, it could be a warning sign to potential lenders that you’re not budgeting properly and may pose a credit risk. Try to pay off balances as soon as possible and leave enough room on credit cards for unexpected emergencies.

Why is it important? Your credit score can have a big impact on your finances. Financial institutions use your credit score to determine how risky a loan is and how likely it is to be repaid on time.

The riskier (or lower) your credit score, the higher your interest rate and monthly payments are likely to be for large purchases. Over time, that could mean paying thousands more in interest on car loans and other necessities.

If you’re young and just starting out, you might want to apply to become an authorized user on your parents’ credit card account. As payments are made, this will be flagged and will help build your credit history. Low limit cards are also a good option as they are often capped at $500. Just make sure you make payments on time each month and avoid going over even a low limit card.

Young people who work part-time or who receive monetary gifts for high school graduation can consider setting up a savings account with small recurring deposits and taking out a loan from their savings to build a credit. These “secured” loans generally have lower interest rates as well as smaller payments, which makes them more affordable.

The same goes for consumers with lower credit scores, who can save part of their tax refund and borrow to avoid high-interest loans and improve their credit. If the savings account remains intact while the loan balance is paid off, the result is a savings opportunity.

Spending a little time understanding what your credit score is now and taking the time to improve it can make a big difference in the cost of your purchases over time. Free financial calculators and educational resources are available on the credit union‘s website for your use.

Remember, now is always a great time to brush up on your financial knowledge and credit score. If you have some free time this summer, we encourage you to invest a little in yourself and your financial future. The benefits can really add up.

Susan Mandarino is Vice President of Brand and Marketing at Abound Credit Union.

Susan Mandarino is Vice President of Brand and Marketing at Abound Credit Union.


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