How to Build and Maintain Good Credit
The more established and healthy your credit is, the better your chances are to be approved for a loan and receive better rates and terms. If you’re just starting out, it can be tricky to figure out where to begin to start building your credit. If you’ve been using credit for a while, you may feel stuck in a credit rut, wondering how you can improve your score. Thankfully, there are a number of changes you can make, big and small, to help you achieve and maintain good credit.
Check Your Credit Report
Your first step in improving your credit should be making sure everything is in order. Request a free copy of your full credit report and review it to make sure all of your information is correct and up to date. You are entitled to one free credit report every year from Annual Credit Report. Contact the credit bureaus if you notice any errors on your report to have them remove or correct the errors. Removing the errors from your credit report is almost like starting over with a clean slate!
Always Pay On Time
Our payment history is the most influential factor in calculating your credit score. Late and missed payments can damage your score, so make sure all of your bills are in your name and paid on time each month, and pay at least your minimum payment amount. If you can afford to pay more than your minimum, by all means do.
If you have trouble making sure your payments are made on time, set up payment reminders and automatic payments so you never miss another due date. Enroll in Bill Pay today within Digital Banking to automate your payments, and create reminder alerts for upcoming bill payments using Money Manager.
Keep a Low Balance
Your total amount owed to credit lenders is another key factor in determining your credit score, so you want to keep that amount as low as possible. Using the credit you have isn’t a bad thing, just be mindful of how much you’re using. If you get to close to maxing out your accounts, lenders may think you’re more likely to default on your payments. The suggested rule of thumb is keeping your credit usage below 30% of your available credit. This is known as your credit utilization ratio. Instead of making large purchases on a credit card that can send you over the suggested credit utilization ratio, make small charges you know you’ll be able to pay off on time. If you’re not able to pay your bill in full each month, pay as much as you can afford so you don’t wind up overpaying on interest charges.
Mix it Up
Your overall credit mix is another factor considered in your credit score. Credit lenders like to see that you can handle multiple loan types at the same time. If you can, diversify your credit mix beyond just credit cards. Don’t apply for loans or credit just to have it, but it can actually benefit your score for you to have other types of loans like auto loans, mortgage loans, or even student loans. Applying for a mortgage or a car loan is a big financial decision, so don’t take that leap if you’re not quite ready for it.
Open a Credit Card
Applying for a new credit card is one of the best ways to start building your credit. Keep best credit practices in mind and make sure you keep your balances low and always make your payments on time. Regular use of your card will help you improve your credit over time, and you can even earn rewards if your credit card has a rewards program. The Robins Financial Credit Union Visa® Platinum Rewards Credit Card is a great card to help you build credit and earn rewards as you spend.
Start Small
Taking out a small loan or line of credit can help you start building credit in easier to manage amounts as you establish your credit history. Robins Financial Credit Union offers a number of personal loan options; we’re sure to have what’s right for you. We even offer a Credit Builder Loan specifically designed to assist our members build or rebuild credit and develop the habit of making loan payments on time.
Don’t Overdo It
Remember, new credit accounts are a factor in determining your credit score. Avoid opening a bunch of new credit accounts too close together or right before a major purchase, as this looks like risky behavior to lenders. Opening too many accounts at once can make it more difficult for you to get approved or get the best terms the next time you apply for a loan like a mortgage or car loan.
Pay Off High-Interest Accounts
Paying extra in interest payments each month isn’t doing your credit score (or your wallet) any favors. If you’re carrying a balance on an account with a high interest rate, try your best to get that account paid down as fast as you are able. Or, consider transferring the balances on that account to one with a lower interest rate so your payments will be easier to manage.
Keep Your Oldest Accounts Open
The length of your credit history is evaluated in calculating your credit score, as well as how long each of your accounts have been open. Avoid closing your oldest credit accounts, at least until you establish a strong enough credit history. As long as it’s not doing more harm than good to keep it open, showing that you have a longer credit history will help your score.
Stay on Top of Your Score
Checking your own score won’t lower it. Knowledge is power, so it’s important to know where you stand. You can use an app or service that tracks your credit score, or eligible members are able to view their FICO® Score for free within Digital Banking. Log in now to check your score.
Be Patient
You won’t see immediate changes to your credit score overnight, so don’t let that get you discouraged. Once you plant the seeds of better credit habits, it won’t be long before you see your score start to grow.
Start building your credit today! The Robins Financial Credit Union Visa® Platinum Rewards Credit Card is one of the best cards you can carry and an excellent tool to help you establish and build credit. We offer great rates, outstanding rewards, no annual fee or balance transfer fee, and convenient payment options to help you make sure you never miss a payment. Plus, eligible members can view their FICO® Score for free within Digital Banking so you can always stay on top of your score.
If you’re ready to apply for our Robins Financial Visa® Platinum Rewards card, view our rate information and credit card agreement online now. Apply online now, stop by one of our branches, or give us a call.