Money Matters
Money Matters
Five Simple Steps to Elevate Your Credit Score Today
Kim Chapman shares five actionable strategies to boost your credit score quickly and effectively. These proven techniques address the key factors that influence your credit rating, helping you qualify for better loans and financial opportunities.
• Pay bills on time as this accounts for 35% of your credit score
• Keep credit utilization below 30% of your available credit limit
• Don't close old accounts as they contribute positively to credit history
• Limit opening new accounts as they can temporarily lower your score
• Check all three credit reports regularly through annualcreditreport.com
• Contact creditors immediately if you can't make payments to discuss options
• Consider speaking with a financial counselor if struggling with debt management
Visit neighborsfcu.org/financial-wellness for more tools to help build a strong financial future and subscribe to the Money Matters podcast for ongoing financial guidance.
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Welcome to Money Matters, the podcast that focuses on how to use the money you have, make the money you need and save the money you want – brought to you by Neighbors Federal Credit Union.
The information, opinions, and recommendations presented in this Podcast are for general information only and any reliance on the information provided in this Podcast is done at your own risk. This Podcast should not be considered professional advice.
Welcome to Money Matters, the podcast that focuses on how to use the money you have, make the money you need and save the money you want. Now here is your host, ms Kim.
Speaker 2:Chapman. Hi, welcome to another edition of Money Matters. I am your host, kim Chapman, and guess what? I am flying solo today because I just wanted to stop by to give you five quick tips of things you can do now to boost your credit score. You know, that thing you need when you want to borrow money. That ranges anywhere from 300 to 850. If you don't like your score and you want to increase it, here are a couple of tips of things that you can do For starters.
Speaker 2:Number one pay your bills on time. Did you know that that accounts for 35% of your credit score? Lenders are going to report if you're even a day late in some cases. So make sure you're paying your bills on time. Not only can it help boost your credit score, it can save you money because, think about it, when you pay your bills late, sometimes you have an added late fee and then that takes money from your cash flow, which may prevent you from paying down other debts. So, yes, pay your bills on time.
Speaker 2:Number two pay down your debt, especially if you have credit cards. We call that credit utilization. So think about your credit card. You have a limit. If you have a limit, of $1,000, how much of that should you spend? I know, when I was reckless in 18, I thought it meant $1,000. But actually the rule of thumb is you don't want to use more than 30% of your available credit. So again, if you have a limit of $1,000, that's going to be $300. So you don't want to go crazy and go up to $500 or $1,000 because you could actually be hurting your credit score.
Speaker 2:I see lots of individuals all the time they have credit cards, they make their minimum payment. Sometimes they even make more than their minimum payments, but they're wondering why their score won't grow. And it's because they're above that 30%. So take a minute, look at your credit card balances, look at your limits. If you want a quick and easy way to boost your score, start working aggressively to get those balances down to under 30%, and you want to keep it under 30%. The lower you can get it, the more it will enhance your credit score. If you can get it down to 20% or even 0%, that's going to make your credit score even better. So, yes, pay down those balances, pay down the debt. Keep your credit utilization low.
Speaker 2:Third thing is don't close those old accounts. I know if you go and look at those accounts and you say, okay, I'm going to pay it down to zero. Should I keep it open or should I close that account? Part of your credit score is how long you've had credit. So if you've had a credit card for five, maybe even 10 years and you've paid that balance down as long as you don't think you're going to be tempted to go back and recharge on that account and create a big balance, keep that account open. Having an account and create a big balance, keep that account open. Having an account open for a long period of time where you've had a good payment history can really really help grow your credit score. If you've only had an account for a year or two, then you may want to evaluate something along those lines. But the old accounts you want to keep those open. They really bring value to your credit score.
Speaker 2:Now the next thing has to do with new debt. Sometimes people have the misconception that, hey, I want to boost my credit score, so I'm going to go and open a bunch of brand new accounts. That can actually trigger a red flag to lenders, because new accounts mean new money, new debt. So you want to monitor how many accounts that you open in a short period of time, which is generally considered two years, 24 months when you open new accounts. Not only does it create a hard inquiry in most cases and hard inquiries can impact your credit score it can lower your credit score. So again, keep an eye on how many new accounts that you open in a given time period. It can also re-age the average age of how your account is. So if your oldest account is 10 years and then you turn around and open a new account today, it may re-age that account and make it five years or four years. So there can be some negative consequences when you're opening new debt, especially if it's not necessary.
Speaker 2:And then we want to talk about checking your credit report. How often do you look at your credit report? I'm not talking about the score. I want you to focus on the report. Look at it line by line. Look at the information Is your name and address correct, your social security number? Look at the accounts. Do you and they're marked closed? Or do you have accounts that are marked closed and you thought they were open? Look at your balances. Now, keep in mind with your balances they may be off slightly because maybe your most recent payment hasn't posted, but if you think you should owe $400 and they have you owing $2,400, obviously that's a huge discrepancy. So you want to make sure that you identify any mistakes, any errors, and also make sure that you're not a victim of fraud, that someone hasn't opened an account in your name that you may not even be aware of.
Speaker 2:Now, where can you find this information?
Speaker 2:Yes, there are tons of different apps out there.
Speaker 2:There's Credit Karma, there's Credit Wise. There are tons of different places you can look, but my strong recommendation is that you go to annualcreditreportcom. When you go to annualcreditreportcom, you will get access to all three credit reports. That's Equifax, transunion and Experian. Some of the other apps only give you access to one or two of the different bureaus, whereas at annualcreditreportcom, you'll get access to all three. When you're reviewing your credit reports with an S, you want to make sure you look at all three, to make sure the information is consistent across all three of them, because the one report that you don't look at could be the one that can cause you to have a loan denial. Report that you don't look at could be the one that can cause you to have a loan denial Again. These are just some quick tips, actionable things that you can do now to help boost your credit score, because our goal here is to help you use the money you have, make the money you need and save the money you want, and that's all I have for you today.
Speaker 1:It's time for Blueprint Building Blocks Small changes that lead to big financial wins.
Speaker 2:Let's stack up for success. Keeping your credit score healthy is very, very important. So if you find yourself in a situation where you can't pay a bill, here's some quick tips of things that you can do. One, reach out to that creditor or lender and see if they can grant you an extension or change your due date. Find out if they have a hardship program that may actually lower your payment altogether. Three, go see a professional financial counselor and see if they have tools or resources that they may be able to help you get back on track with. Or four, if you can borrow money, because, again, paying back the money to a friend may not damage your credit nearly as much as having a late pay on your credit report.
Speaker 1:That's a wrap on today's Blueprint Building Blocks. Stay on track with your financial journey. Subscribe to the Money Matters podcast and visit neighborsfcuorg slash financial wellness for more tools to help you build a strong financial future.
