5 Ways to Improve Your Credit

a credit tachometer in foreground and a desk with a laptop displaying a credit score in background

Your credit score affects your ability to get a loan, get housing, and even obtain/maintain a security clearance.  Did you know that 62% of Americans have a credit score lower than 750?1 Improve your credit score with these five tips.

  1. Pay your bills on time, every time.  35% of your credit score is built on credit history.  If you’re in the habit of making late payments, you have a poor credit history.  Depending on how late your payments are and for how long you continue to make late payments, you could hurt your score by 10 – 100 points.
  2. Maintain a low credit card balance because the closer you reach your credit limit, the more points you’re likely to knock off your credit score.  High utilization could even drag down your score by 100 points or more!  A good goal for helping your credit score is to not exceed 25% of your credit limit.
  3. Refrain from constantly closing old accounts and opening new ones.  Your credit score can take a hit when you open new lines of credit; plus, the age of an account factors into your score, so the longer you’ve had an account open, the better.  Opening new lines of credit could decrease your credit score by 10 – 60 points.
  4. Look out for fraudulent activity.  Every two seconds someone becomes a victim of identity theft.2  Identity theft can cost thousands of dollars to repair and can ruin your credit.  Check your credit report for suspicious activity – like accounts you didn’t open – that may mean someone has stolen your personal information, so you have a better chance of catching fraudulent acts before they get out of hand.
  5. Periodically check your credit report for errors.  You should also check your credit report for errors that may be lowering your score.  In a study on the accuracy of credit reports, one in four people found errors on their reports.3  Each major credit bureau (Equifax, TransUnion, and Experian) has action steps for reporting and correcting errors; therefore, if you see a mistake, visit the reporting agency’s website.

Did you know that if you’re an MSA member, you can view your TransUnion credit score and access your TransUnion credit report right from your member dashboard?  And it’s absolutely free! Plus, viewing them through MSA won’t negatively impact your score.  Members also get free 24/7 credit monitoring of all credit activity as reported by TransUnion, and alerts are sent, via email or text, for any detected activity, so you have the ability to confirm whether suspicious activity is fraudulent or not.

If you have more questions about how credit scores work, talk to your Money Coach.  Every coach is a Certified Credit Counselor who can help you create an action plan to boost your credit score and provide next steps for looking through your credit reports and protecting yourself from identity theft.  It’s easy to get started, call 888-724-2326 today.

 

1Bell, R.  “FICO Scores Reflect Slow Economic Recovery.”  FICO® Banking Analytics Blog.  N.p.  18 Sep. 2012.  Web.  12 Jul. 2013.
2“A New Identity Fraud Victim Every Two Seconds in 2013 According to Latest Javelin Strategy & Research Study.”  javelinstrategy.com.  San Francisco: Javelin Strategy & Research, 5 Feb. 2014.  Web.  25 Nov. 2014.
3“In FTC Study, Five Percent of Consumers Had Errors on Their Credit Reports that Could Result in Less Favorable Terms for Loans.”  Federal Trade Commission.  N.p.  11 Feb. 2013.  Web.  6 Nov. 2013.