- January 4, 2018
- Posted by General Electric Credit Union
- 3 read
3 Ways to Improve Your Credit Score
When was the last time you looked at your credit score? If you haven’t checked it in a while, it’s time to take a peek and see how you can improve your score. It won’t happen overnight, but small changes can make a big difference in the long run. Here are three ways to start improving your credit score today.
1. Eliminate credit card balances.
The average credit card rate in the United States could climb to 16% this year, and with 127 million people carrying credit card debt, the amount being paid in interest can be overwhelming.1
Having a credit card carries a lot of responsibility and spending more than you actually have to pay it off is detrimental. Spending wisely and paying off the balance in full every month will improve your credit score dramatically.
If you can’t pay your entire card balance, paying more than just the minimum every month will help reduce the amount you’re spending on interest and help pay it off faster.
Additionally, you can consolidate your credit card debt by:
- Applying for a personal loan. Often times, these loans will have a lower rate so you can consolidate your debt into a single loan with less interest.
- Transfer your credit card balances to a card with a lower rate. Just because you transfer the debt doesn’t mean it goes away, though. Make it a priority to pay the card off in a timely manner to avoid paying too much in interest.
2. Never miss a payment, ever.
Missing a payment, whether it be a loan payment or an electric bill, can hurt your credit score. Even if it’s just the minimum payment on a credit card bill, it’s better than nothing. Commit to a budget and payment schedule to ensure bills are being paid on time.
Take advantage of tools offered by your financial institution’s Online Banking or mobile app to so your payment is made on-time including: automatic payments or transfers, account alerts, online bill payment system, and money management tools.
3. Avoid hitting your credit limit.
Credit card balances and the percentage of credit you’re using together are major factors affecting your credit score. In fact, 30% of your credit score is based on how much of your available credit you’re using alone, also known as credit utilization. Ultimately, hitting your credit card limit indicates potential trouble to lenders causing your score to drop.
Your credit score and history both play a pivotal role in your financial journey and can be the deciding factor of whether you’ll be approved for future car loans, mortgages, credit cards, or any other loan. If you’re facing a low credit score, you can recover from it. Following these tips create healthy financial habits that over time, will improve your credit score.