May 10, 2024

4 Tips for Building a Strong Credit Score

There's no magical recipe for boosting your credit score; however, there are different things you can do to help inch your way to something more favorable. After all, your credit score is the determinant of many different financial opportunities, like buying a home or borrowing funds.

Try following these four tips to improve your credit score over time:

1. Pay your loans on time. Leverage tools like automatic payments or electronic reminders. If you miss a payment, prioritize catching up and maintaining your credit status. Remember, you don't have to carry balances on credit cards to achieve a favorable score; paying off balances monthly yields great results.

2. Avoid nearing your credit limit. Credit scores are partially based on how much of your available credit limit you use; in other words, aim to maintain low balances relative to your card’s maximum credit limit. Financial experts recommend keeping credit usage below 30% of your total limit.

3. Longevity in credit history is advantageous. Credit scores reflect your track record over time. Demonstrated consistency in loan repayment enhances your creditworthiness. Be thoughtful in applying for credit and keep your oldest credit card open as closing it could take a toll on your credit score. Recent credit inquiries signal perceived need for credit, impacting scoring formulas. Excessive applications within a short timeframe may raise red flags regarding financial stability.

4. Regularly scrutinize your credit reports for accuracy. Be your own auditor. Promptly dispute any suspected inaccuracies. Monitor inactive credit card accounts to prevent potential identity theft.

Ultimately, healthy credit is comprised of healthy habits. Change doesn’t happen overnight – stick with it for the long haul! You’ve got this. If you’re looking for a Certified Financial Coach to help you create a plan of action to better credit, we’re ready for you – schedule an appointment here.

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