Improve Your Credit Score: Simple Things You Can Do To Improve Your Credit
One of the most popular new year’s resolutions year after year is to improve credit scores, and for good reason! Improving credit scores is not only a great goal to set for yourself but an attainable one too. Now is the perfect time to start improving your credit score. In this article, we are going to be talking about some of our best tips and tricks to improve your credit score this year.
What Determines Your Credit Score?
Your credit score is a three-digit number from 350 to 850 with higher scores being better. There are a variety of factors that go into how companies will determine what your credit score is. These factors are based on your financial history with things such as loans, credit cards, and investments. While different credit bureaus may rank scores differently, they should all be relatively similar because they rate your score using similar metrics.
Some of the metrics that they will base your credit scores off include:
- Amount Owed
- Payment History
- Credit Mix
- Length of Credit History
- New Credit
While scores generated from different credit bureaus may be different, they are all using the same information to determine your score meaning that you can be sure it is accurate. We recommend using multiple credit bureaus so you can get the most accurate score possible.
How To Improve Your Credit Score
If you are not happy with your current credit score don’t worry! There are plenty of ways that you can work towards improving your credit score, even without making drastic changes. Use these helpful tips and tricks to improve your credit score this year!
Eliminate Debts
One of the biggest things that you can do to improve your credit score is going to be working towards eliminating any outstanding debts. Having a large outstanding debt on a loan or a revolving line of credit can quickly lower a credit score. Consolidating your debt not only helps improve your credit scores, but it can save you money in the long run with accumulating interest. If you have the funds to pay more than your minimum payment on debts, you should try and put as much towards paying off your debt as you comfortably can. Paying off more than your minimum payment per month is a great way to start, but the most effective way to raise credit scores is to eliminate debt altogether.
Have A Strong Mix Of Credit
If you are focused on building strong long-term credit scores, having a strong mix of credit is going to be essential. While it is entirely possible to build strong credit with only a few credit products, more credit products in your portfolio give you more chances to build strong credit. Some credit products that can be beneficial if used properly are multiple credit cards (revolving credit), home & auto loans, and other loans. Making payments larger than the minimum on multiple lines of credit per month can also quickly build good credit. While this can be a great way to build credit, this is only a good strategy if you can financially afford to pay the minimum monthly payment every month at the very least.
Create A Budget That Works For You
While this may not be something that is going to have a direct impact on your credit score, this can help get you on the right track to having the credit score you are after. Creating a monthly spending budget can help you to see exactly where your money is going. Often, we may not even realize how much things like eating out add up at the end of the month. Having a budget allows you to still enjoy the things you want to without spending beyond your limits. Setting aside money for things like vacation or date night ahead of time can help avoid adding debt to a line of credit that can hurt your credit scores. If you have struggled to find the extra money to put towards making payments above the monthly minimum on outstanding debt eliminating unnecessary spending can help you free up funds in your budget.
Latitude 32 Credit Union is dedicated to helping everyone reach their financial goals. Our team of expert staff are trained to handle a wide variety of needs for different situations. Becoming a member of our credit union is more than joining a financial institution. You are adding an entire financial support team to help you with all your current and future financial needs! Contact us today to learn more.
Latitude 32® Credit Union
1845 Sam Rittenberg Blvd.
Charleston, SC 29407
(843) 556-4809
[email protected]