Whether you are a teen, young adult, married couple or retired, you are always looking for resources to make more informed financial decisions. We have gathered helpful information and tools supplied by mycreditunion.gov.
IMPROVE YOUR CREDIT SCORE
HALLCO strives to help our members achieve their financial goals by “Helping People Afford Life.” Our members frequently ask how to achieve the “perfect” credit score.
Clarke Howard lays it out in just a few easy steps on how to improve your credit score:
- Always pay your bills on time and pay down the total amount you owe.
(accounts for 35 percent of your score)
If you forget all else after reading this, remember this one! This is the single most important rule for having a good credit score.
- Keep a low credit utilization rate.
(accounts for 30 percent of your score)
Let's say you have a credit card with a $10,000 limit. If you're carrying a balance month-to-month of $3,000, you're only using 30 percent of the total limit. But if your credit limit is suddenly dropped to $3,000, then suddenly you're using 100 percent of what's available to you. That's yet another reason to always pay down credit card debt as quickly as possible. You always want to stay at credit utilization of 30 percent or less.
- When you pay off a credit card, don't close the account.
(accounts for 15 percent of your score)
Doing so only reduces your available credit and drives your score down. You want to have between four to six lines of credit. Be sure to use them twice a year -- even if it's just for a dollar store purchase -- and pay them off right away. That will keep them active in your credit mix.
If you're facing a huge new annual fee on a card that has a zero balance, try "leapfrogging." That's my term for using the 45-day window you have before any new terms of service go into effect to shop around. So once you get notice about a new annual fee, start looking around for other no-fee credit cards. Submit your application and once you get your new no-fee card, then go ahead and shut down the original one that wanted to spring a fee on you.
- The remaining 20% of your credit score is comprised of what types of credit make up your credit mix (10%) and how much new credit you have in your life and how quickly you took it on (10%).
Whether you are new to credit or you’re trying to rebuild your credit, good credit is just a few steps away! Contact one of our knowledgeable loan officers to discuss your specific credit needs!