Boosting your credit score is not something that’s going to happen overnight. You’re going to need a long-term plan to make payments on-time, every time. You’re also going to need to control your credit card spending. Here are five tricks to help increase your credit score.
Review your credit report
The best place to start is by reviewing your credit report. This will let you know where you stand and what areas need work. Under Federal Law, you’re allowed to get three free credit reports each year—one report from each of the following credit reporting agencies: Equifax, TransUnion and Experian. You can view your FICO® Credit Score through our Mobile Banking app.
Review your credit report to make sure there aren’t any errors. If you notice an error like an incorrect balance or a loan you paid off that is still showing unpaid, you can dispute it with the credit agencies.
Pay bills on time
Your payment history makes up 35% of your credit score. That’s why it’s so important to pay your bills on time. One late payment on your credit history could drastically drop your credit score. If you tend to be forgetful, set up reminders on your computer or phone to remind you when your payment is due. Or, set up automatic payments or use Bill Pay and you’ll never be late.
Pay off debt
The smaller your debt-to-credit ratio is, the better your credit score will be. Try paying off as much debt as you can each month. If you’re just making the minimum payments on your credit card bill, try doubling that payment. You could also try making one extra mortgage payment each year. The faster you pay off debt, the faster your credit score will increase.
If you’re wondering what kind of an impact a bigger payment can make, check out our free online calculator called, “Increase Your Monthly Payment”. Increasing your payment each month will lessen the amount of interest charges and shorten the number of months it will take to pay off the loan.
Track your spending
Making extra payments on existing debt may sound like a great idea, but coming up with the extra funds may require you to make some spending cuts. Take a look at your overall financial picture by reviewing your spending habits over the past 3 months. You may find you don’t need to eat out as often or maybe you can spend less on clothing. Figure out where you can make cuts and create a budget to stay on track.
If you need help creating and sticking to a budget, try using our free online personal financial management tool, My Financial Partner. You can track spending, set financial goals and establish realistic budgets all in one place.
Don’t push it to the limit
Every credit card has a limit, but that doesn’t mean you have to stretch it to the max. For example, if your credit card limit is $5,000, that doesn’t mean you have to charge to that limit. Your budget may only allow for you to comfortably charge $3,000 each month. Set your own limit so you don’t over extend your spending.
Start practicing these good financial habits now and you’ll start to see your credit score improve over time.