10 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.

• Pay 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.

• Pay 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.
• Monitor your credit score — The higher your credit score the lower the cost to borrow money. You can monitor your score with any one of the free credit monitor services available with financial institutions or credit card companies.
• Review 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.
• Keep 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.
• Limit 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.
• Create 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.
• Create 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.
• Establish 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.
• Avoid 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.

At Town & Country Federal Credit Union we believe everyone deserves a second chance. If you would like to talk with someone about improving your credit or have other financial questions, contact us at info@tcfcu.com, or call 800.649.3495.