Improving Your Credit Score Maintaining a good or high credit score is essential. Your credit score determines interest rates on loans and affects investments such as purchasing a new car, home, or higher education for your children. Since the recession, credit card issuers and even potential employers have inspected credit scores to determine if an individual could be a risky investment. Your credit is considered to be a reflection of yourself based on responsibility, punctuality, and, most importantly, reliability. Getting your score to a credit-friendly range is top priority because higher credit scores are now more important to the financial industry. Six Tips to Boost your Score Check your credit report for errors. Credit reporting companies can make mistakes by mixing up your credit activity. The most common reasons for slips are due to identity theft and clerical oversights. Sort through your payment history in your credit report to make sure every activity reported was actually done by you. Call a credit reporting agency if you find any mistakes in your report. Don’t be a credit seeker. Applying for too many credit cards during a short period of time can reduce your credit score. Every application is taken into account and recorded onto your credit report. Try not to apply for credit that you don’t need. Keep your debt low. A common misconception among consumers is the need to maintain debt on credit cards to increase an overall credit score. In reality, the less credit you use, the better. Using most of your credit line at one time and then paying it off in full can damage your standing. Credit bureaus receive your balances from banks on any given day, like the day that you are closest to your limit. Don’t pay your debt off all at once. There is no need to wait until you receive your first statement to make a payment or even pay your debt all in one chunk. Making micropayments is the most effective way to increase your credit score. Small payments throughout the month help reduce your debt utilization ratio, which takes into account your accumulated debt and credit limit. Ask for a credit line increase. Asking for more credit can be good for your credit score. If you have a favorite credit card that you use often, maintain properly, and have a good standing with your bank, ask for a credit line increase. Don’t let this backfire though. Make sure you are confident about your credit standing with the credit card. If a bank denies you, you may be tagged as a credit risk. Actively use your credit cards. Once you get a credit card, don’t just store it away in your wallet and hope to increase your credit score. Use it; keep it active. Even if you make small purchases, using your credit cards demonstrate credit responsibility. Don’t risk closing your accounts due to inactivity. The longer you keep your accounts, the better your credit score. Contact Us Learn more about credit score management from the experienced members of the Valley Federal Credit Union in Harlingen, Brownsville, and across the Rio Grande Valley. Please visit us at one of our branches or call us today at 956.546.3108.
