Your credit score and credit report are typically reviewed by lenders before they’re willing to approve you for a loan. In general, the better your score, the better rates you’ll receive. And your credit score could have an impact beyond getting a loan. Landlords, cell phone companies, and some employers look at credit scores to determine if you’ll be a good customer or employee.
If you’re looking to improve your credit score, start with these tips:
- Pay your bills on time. A significant portion of your credit score is determined by your payment punctuality. To make sure you never miss a due date, set up automatic bill payments in online banking or through the biller’s online payment system.
- Try not to charge more than 25-30% of your available credit. If you have three credit cards and your combined credit limit for all three cards is $20,000, you shouldn’t charge more than $5,000-$6,000 a month, even if you intend to pay the balance in full. Credit card companies can report your balance to credit bureaus at any point during the month, so it may look as though you are using a lot of your available credit, which could lower your credit score.
- Check your free credit report at least once a year. Mistakes and outdated information on your report can lower your score. You can get a credit report from each of the three major reporting agencies for free at www.annualcreditreport.com. You do not need to get a report from all three agencies at once – you can spread them out over the year. These free reports do not include your credit score, so checking them won’t have any negative impact on your score.
- Carefully consider requests to be a co-signer on loans for others. You are responsible for paying the loan if the other person cannot, and the payment history of these loans can impact your credit, positively and negatively.
- Pay all of your parking tickets, library fines, and other small bills. Old debts can impact your credit if they are reported to a credit agency.
- If you’re going to apply for something that requires a credit check, don’t close old credit card or loan accounts or open many new ones for 6-12 months before you apply. This activity can have a negative impact on your credit score in the short term.
Every person’s credit situation is unique. SLFCU can help you review your free credit report once you’ve received it and explain how you might be able to make adjustments to improve your score. If you would like assistance reviewing your credit report, call us at 505.293.0500 or 800.947.5328.
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