Managing Credit

What might help your score?

  • Pay all bills on time
    Tip: Pay attention to due dates and due times

    • A recent 30 days late payment can lower your score more than a paid judgment from 6 years ago
  • If you carry a credit card balance, pay more than the minimum every month. Paying only the minimum can lower your score.
    Tip:  Schedule automatic monthly payments if that helps you pay on time.
  • Pay off debt instead of moving it around to different credit cards or lenders.
    Tip: If you pay off a credit card, don’t close the account if it is an account you have had for a while. If you only recently opened it, closing the account may not have much effect.

    • Don’t use more than half of your available credit limit on credit cards and other revolving loans – even if you pay it off every month.
      Tip: Pay attention to credit card limits – card companies can lower your credit limit triggering over the limit fees.
  • Build Credit
    • If you’re young or don’t have a very long credit history, don’t open a lot of new accounts too quickly. That can lower your average account age and your credit score.
    • Ask a family member with good credit if you could be an authorized user on their credit card – if their creditor reports authorized user data to the credit bureaus. You could also ask to be added as a joint account holder. Note there are risks with attaching your credit report to another person.
      Tip:   Secured credit cards can help build up a credit history but only if the creditor reports to a Credit Reporting Bureau.
    • The better your financial track record, the better you can weather the occasional late payment without greatly impacting your score.
  • Shop around for credit
    • You can make multiple applications for a home or car loan within a 30-day period and creditors won’t view it as a negative credit
      Tip:  Think twice about store offers to open a new credit card to receive an instant discount on your purchase. The new account could lower your credit score and cost you more than you will have saved with a 10% discount on your purchase. Plus you should take time to review the details of the offer-hard to do in the checkout line.
    • When you apply for new credit, a “hard inquiry” shows up on your credit report and can affect your credit score for 12 months. Too many hard inquiries can send the message to creditors that you are desperate for new credit.
    • Tip: “Soft inquiries” don’t affect your score so don’t worry about ordering your free annual credit reports or a free report when you’re turned down for credit.
  • It’s good to have at least one major credit card in addition to retail store credit cards.
    Tip:  BUT, don’t open new accounts just to have a better credit mix. That could lower your score more in the short term.
  • “Payday” and title loans may not report to Credit Reporting Bureaus unless you miss a payment. Even if the lenders do report regular payments to the Bureaus – be careful using these higher cost forms of debt since other lenders may view them negatively.

Good Links

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