(Sponsored) Guidelines to Building Your Credit Score

by | Nov. 20, 2017

Your credit score is a snapshot of your current financial situation, providing creditors important information on your ability to keep up with payments and bills. Developing a good credit history can save you money and provide you with better financial opportunities.

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Your guide to building a better credit score:

Know and manage your credit score: This will give you a plan to improve or maintain your score. Review your credit report quarterly for accuracy. Visit the Experian, TransUnion and Equifax websites for more information. You can also review your credit report for free annually at annualcreditreport.com.

Pay on time: Delinquent payments and collections are a major factor in lowering your credit score.

Stay below 30% credit utilization rate: Based on your total credit limit, determine your recommended credit utilization threshold, and set up balance alerts to ensure you don’t exceed this number. For a $5,000 line of credit, 30% credit utilization would be $1,500.

Avoid opening and closing credit cards: Only apply for new credit card accounts as needed. A hard inquiry by a lender or credit card issuer will affect your credit for a year. Keep existing accounts open, as credit length has a positive impact on your score.

Minimize existing debt: Rather than only moving debt from one card to another or one loan to another, focus also on paying debt down.

Benefits of a high credit score:

Lower interest rates: Lenders are more likely to extend attractive rates to those with a high credit score and clean credit history. According to creditsesame.com, having a score of 650 versus 760 can cost an additional $125 per month on a 30-year fixed-rate mortgage loan.

Excellent credit card deals: Credit-savvy consumers know that it pays to use reward credit cards when the balance is paid each month. The best rewards cards provide attractive incentives, a variety of rewards, cash-back options, and competitive rates.

Lower insurance rates: Enjoy a better rate on auto, home, and life insurance as a result of stellar credit and a consistent payment history.

Increased credit card limits: When you manage credit responsibly, your borrowing capacity increases. Request an increase directly, or receive one periodically from your credit card company. Since the ratio of available credit plays a role in calculating your score, raising the limit could also bump you up a few points.

More negotiating power: Don’t be afraid to use your credit score as leverage when negotiating a deal. Get a higher line of credit, lower interest rates or work out an attractive repayment plan with your solid credit history.

*According to myFICO.com

Sharon Cook is a wife, a mother and the Chief Marketing Officer/SVP of Mountain America Credit Union, where she oversees the marketing, PR, social and web departments. She has dedicated her life to helping people make smart decisions—whether financial, professional or personal. “It’s why I love all of my roles,” says Sharon. Reach her at scook@macu.com. For help with financial needs, call 1-800-748-4302 and a Mountain America representative will assist you.

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