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Credit Scores: Keep Your Glass Half-Full

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This is part 3 of a 4-part series on credit. If you missed the previous posts, catch them here:
Part 1
Part 2


As a country, we are paying more attention to our credit scores. This is a classic glass half full/half empty situation. Thanks to easy access to our financial information, it’s easier than ever to see your score and track your progress—which many would consider to be the glass half full. Tools like a free annual credit report and the ability to view your FICO® Score* on your mobile banking app are just two of the ways to stay on top of your score.


However, generationally speaking, we’re not all placing the same importance on our credit score. This is the glass half empty part. According to a recent survey by Discover, only 54% of millennials believe their credit standing is vital, compared to 65% of baby boomers and 63% of Gen X. Many millennials lack a general understanding of credit scores. A LendEDU survey reports that 25% of millennials don’t even know what a credit score is, let alone how it can affect interest rates, financing for an apartment, job opportunities or their insurance premiums.


Why is knowing your credit score so important?
Simply put, being aware of your current score leads to a better understanding. That understanding typically leads to better credit score management and, eventually, higher scores. The Discover survey found that 70% of people who checked their credit score at least once per month reported a positive effect on their credit behavior—only 31% of those who checked their score once per year said the same.


Your credit score checklist
Now that you’ve decided to be more diligent about tracking your credit score, there are a few things you need to do:

  • Find a way to access your credit score on a regular basis. Check with your credit card company/financial institution to see if they provide it free to their customers. Many banks and credit unions now offer free access on their mobile banking apps.

  • Request a copy of your credit report. Everyone is entitled to one free credit report from each of the three major credit bureaus—Experian, Equifax and TransUnion.

  • Look for errors. When you receive your credit report, look for errors. First thing to look for? Mistakes in your personal information. Misspelled name, incorrect addresses, wrong middle initial—these could be lowering your credit score. Second, look over the listed accounts. Watch for active accounts that should be closed, accounts you don’t recognize, incorrect credit limits and reported late payments of which you’re not aware. Learn how to deal with errors in part two of our credit series.


Protect your good credit
If you’ve taken steps to increase your credit score, or already have a great score, you probably want to keep it that way. As these surveys illustrate, many millennials aren’t clear on what behaviors affect their credit score. In fact, according to the LendEDU survey, over 36% mistakenly believe that, as long as they make their payments on time, they can max out their credit cards without any adverse effects to their credit score. Some even believe this can improve their score.


Here are tips to protect your good, or great, credit score once you’ve got it:

  • Pay on time, every time. Ignoring the due date on your bills, especially your credit card bills, is possibly the greatest injustice you can do to your credit score. A history of late or missing payments gives your credit card company a reason to refuse to raise your limit or offer you a better card. To help you pay on time, set up reminders on your smartphone or, better yet, automatic payments.

  • Use your credit, but don’t max it out. When lenders are evaluating whether to lend you money or approve you for a new credit card, they typically look at your utilization rate—the percentage of credit available compared to your total limit. For example, say you have two credit cards with a combined limit of $2,000. If you have used $750 on each credit card (for a total of $1,500), that means you have a utilization rate of 75%. When it comes to getting a loan or a new credit card, the lower the percentage, the better. Conversely, an open credit card account that never gets used doesn’t do anything for your credit score either. Charge a few things each month that you can easily pay off in full by the due date. This will help keep your credit score high.

  • Don’t apply for more credit too quickly. Each time you submit a credit application, your credit score takes a hit. You could even be flagged for being a bad credit risk. Continue to track your score to increase your number. If you’re paying off your cards every month, consider getting a rewards card.


So, if you haven’t looked at your credit score in a while (or never), now is a great time to do it!


This is part 3 of a 4-part series on credit. If you missed the previous posts, catch them here:
Part 1
Part 2 



*FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.

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