If you're planning to get a loan or just want to strengthen your financial standing, improve your credit with these six tips.
- A significant portion of your credit score is determined by whether or not you pay your bills on time. To ensure on-time payments, set up automatic bill payments in online banking or through the biller's online payment system.
- Do not 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 even if you intend to pay the balance every month. Credit card companies can report your balance to credit bureaus at any point during the month, so it may look like you are using a lot of your available credit, which will lower your credit score.
- Check your credit report at least once a year to ensure accuracy, as mistakes 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 – if you get one report from one of the agencies every four months, you’ll have more up-to-date information and may be able to catch errors earlier. These free reports do not include your credit score.
- Carefully consider whether you should co-sign loans for others. You are responsible for paying the loan if the other person cannot, and the payment history of these loans will impact your credit.
- Pay all of your parking tickets, library fines, and other small bills. Old debts can impact your credit if they are sent 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 run.
Every person's credit situation is unique. If you need help reviewing your credit report, call us at 505.293.0500 or 800.947.5328.
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