Balancing a credit score is just that, a balancing act. Being aware of
all of the factors that affect your credit score can lead you toward
achieving the score of your dreams, but letting a payment slip through the
cracks or closing an unused credit card can negatively affect your score
in a significant way. Paying your bills on time is perhaps the most
influential factor in increasing your credit score, but, like the best
things in life, achieving great credit takes time. In addition to paying
your bills on time, implement these 5 tips to fast-track your journey
toward excellent credit:
- Avoid using a high proportion of available credit -
Simply put, never max out your credit card. Running up against your
credit limit is not only stressful, but it also lowers your credit
score. For the best results, keep credit card balances between 10%
and 20% of your credit limits. When it comes to using available
credit, less is always more.
- Don't close unused credit cards - Closing
credit card accounts negatively impacts the credit utilization
factor of your credit score, thus, clouding your credit history and
lowering your score. Rather than closing the account of that extra
credit card sitting in your junk drawer, consider keeping it active
by using it every now and then for small purchases and paying it off
on time.
- Build credit without debt - To avoid
accumulating debt while building credit, be sure to pay your monthly
credit card balance(s) in-full. If you're unable to pay it in-full
and you must carry a balance, pay the required minimum each month to
avoid lowering your existing credit score.
- Watch for inaccuracies on your credit reports -
Even as our world becomes more automated, the risk for inaccuracies
still exists. To prevent credit report errors from harming your
credit score, regularly check your report from the three credit
bureaus (Equifax, Experian and TransUnion) for inaccuracies. If you
see an error, report and dispute the information immediately.
- Be a conscious co-signer - When determining
whether or not to co-sign for a friend, family member or partner,
exercise great caution. While you may pay your bills on time and in
full, if the individual you are co-signing for submits late payments
or skips them entirely, the credit score you tirelessly worked to
build will suffer immensely.
If you are interested in learning more about how to build credit, or
if you have a family member ready to embark on their credit journey,
consult one of our financial experts at NDBT today. Visit www.ndbt.com for
more info. Member FDIC.
