When it comes to your finances, your credit score is one of the most important numbers you should know. It can affect loan and credit card approval, interest rates, whether you get hired for the job you really want, and much more.
Boosting your credit score can feel like an uphill battle, but it doesn’t have to be! In this article, we’ll walk you through a few ways to get your credit score where you want it and open the door to new possibilities.
What is a credit score?
Your credit score is a three-digit number ranging from 300 to 850, calculated based on your payment history, types of credit you have, length of your credit history, amounts owed, and any new credit applications. Lenders use your credit score to judge how likely you are to pay your debts on time and in full.
Typically, the higher your score, the better your credit.
Don’t know your credit score? You can check your credit score for free at annualcreditreport.com, or directly through any of the three credit bureaus.
Strategies for improving your credit
Pay your bills on time
The quickest and easiest way to improve your credit score over time is to pay your bills by the due date. It seems simple enough, but this small habit can increase your ability to get good loan terms and lower rates.
If you’re struggling to keep track of all your recurring bills, consider switching to automatic payments. Set it and forget it, and never worry about missing a due date again!
Reduce your credit utilization
Credit utilization is calculated by dividing the amount of credit you’re using by your available credit. When you owe more, your credit score is more likely to drop. A good way to cut down your credit utilization is to pay more than the minimum monthly payment when you can, and avoid large credit card balances for months on end.
Check your budget for ways to cut unnecessary spending and free up some funds to pay down your balances a little more each month.
No budget? No problem! Getting started is easy with our budgeting guide.
Maintain good money habits
Good habits take time to reflect in your credit score. Even if you aren’t seeing the change you’re hoping for right away, don’t give up!
Keep up the good work, and try to avoid:
- Opening multiple accounts in quick succession
- Making late payments
- High balances on your credit cards for months at a time
- Closing older accounts, even if you don’t use them anymore
Building and maintaining good credit doesn’t have to be a struggle! At Spectra, we’re always one call or click away, ready to answer all of your credit questions.
Want to learn more about credit scores and other financial basics? Check out our educational resources or contact us today!
