12 Steps to Building Good Credit

You have probably heard that having “good credit” is important and the higher your credit score the better, but why does it matter?

Good credit and a strong credit score can influence many financial decisions. Your credit score and credit history reflect your ability to borrow money and pay it back responsibly and in a timely manner.

A good credit score is usually anything above 670, the closer your score is to 850, the better. The higher your credit score, the lower the cost to borrow money and the more you can save.

Your credit score is not only important when you want to make a purchase or take out a loan, it also matters when you want to rent an apartment, get a cell phone, apply for insurance, or even find a job.

So, whether you are looking to establish credit, repair damaged credit after a financial setback or improve your credit to prepare for a major purchase, here are some things you can do to boost your score.

For Town and Country and….

• Paying bills on time. Payment history is the most important part of your credit score. To avoid missed payments, schedule when you want your bills paid. It is easy with Town & Country’s bill pay feature in online banking.
• Paying down debt. Set up a plan to pay down balances on high interest credit cards first. Experts recommend keeping credit card balances below 30% of your total available credit.
• Monitoring your credit score. The higher your credit score the lower the cost to borrow money. You can monitor your score by signing up for Town & Country’s free Credit Score service powered by SavvyMoney available to all Town & Country online banking and mobile app users.
• Reviewing credit reports annually. Check your credit report once a year to see if there are any errors or unpaid debts. You can get a free credit report from each of the three credit bureaus annually at www.FreeCreditReport.com.
• Keeping old accounts open. One building block of your credit score is the age of a credit account. Even if you are no longer using an old credit card, keeping the account open can help avoid a drop in your credit score.
• Limiting new credit cards and loan applications. Applying for a credit card or new car loan is considered a “hard pull” and can lower your credit score. Don’t open new credit cards you don’t need. Any lost points on your score can take six months to regain.
• Creating a mix of loans. Strive for a mix of different types of credit – car loan or personal loan and credit cards. This shows you can handle different types of loans. If you have a few credit cards, using each card regularly and paying off the balance monthly will help boost your score.
• Creating a budget. A budget will help you track your income and expenses to see where your money is going and provide the information you need to determine how much you can put towards paying down debt each month.
• Establishing regular savings. Develop a savings habit by regularly setting money aside. Even if it is just $10 a week, your balance will grow. Next time you have an unexpected expense, having a savings cushion will give you the money you need to help pay for it.
• Asking for a secured credit card. If you want to establish or rebuild credit, a secured credit card may be the answer. A cash deposit into a special savings account establishes your credit limit. Use the credit card like any other. Responsibly using the card will help build credit.
• Getting a credit builder loan. Rebuilding your credit score after a financial setback can be a challenge. A credit builder loan may be an option. Money deposited in a special saving account will fund the loan. You’ll make fixed payments for six to 24 months and have access to the money at the end of the loan. The credit union will report your on-time payments to the credit bureaus, boosting your credit score.
• Avoiding fraud. Protecting your credit and personal financial information is important to help avoid identity theft. Use strong passwords and add an authentication step, be alert to pfishing and other scams, use alerts, protect your mobile device, and use a digital wallet.