Which number would you rather reveal to a friend: your weight or your credit score? A survey from the National Foundation for Credit Counseling found that people would be more embarrassed to admit their credit scores than reveal their age or weight. Just like erasing those laugh lines, boosting your credit score takes time and commitment. Here are five simple ways to raise your score.
What’s a credit score?
Your credit score is calculated based on your use of credit, payments to creditors, outstanding debt and more. It signals to potential creditors whether or not you’re a good credit risk. Scores fall between 300 and 850.
Steps to boost your credit score
- Pay your bills on time. Avoid late payments and collections. These can have a negative impact on your credit score.
- Keep low balances on credit accounts. Charge or borrow only what you can afford to pay back in full each month. Having less outstanding debt could mean a higher score.
- Pay off debt. Look for ways to refinance or consolidate debt if it can result in lower total interest paid over time and faster principal pay off. This step could help raise your score too.
- Keep zero-balance credit cards open. Closing old accounts could potentially lower your score. Credit bureaus may give you a higher rating if you have access to more credit.
- Verify your credit report information. The three major credit-reporting bureaus — TransUnion, Equifax and Experian — allow you one free copy of your report once per year. Request a copy from each agency by visiting AnnualCreditReport.com.
Do this to monitor your credit history and score throughout the year. Always examine the file to ensure the information is up to date and correct. Fix any mistakes that could be weighing down your score. Your credit union, bank or credit card company may also make your score available for little to no cost.
Remember, your age, weight and credit score are personal. But you’ll smile on the inside knowing a higher credit score number is a good thing.
Article provided by Local Government Federal Credit Union.
The advice provided is for informational purposes only. Contact a financial advisor for additional guidance.