At the credit union, we receive a lot of questions about credit reports and credit scores.  How a score is calculated and how to increase a credit score are among the top questions.  It’s not the easiest question to answer because credit scoring systems are complex and vary between creditors, including different types of credit.  However, there are some fail-safe tips that transcend the credit bureaus that can aid in improving your credit score!

Are you paying your bills on time?  Payment history is a significant factor in determining your score.  If any bills are behind, pay them current for an instant credit boost.  If your credit report indicates late payments, collection accounts, or bankruptcy, it will affect your credit negatively.  Settle with any collections or pay them in full to also see an uptick in your score.

Are you maxed out?  Review your credit card limits and available balances.  Credit utilization is another BIG factor in determining your score.  Most scoring systems evaluate the amount of debt you have compared to your credit limits.  If the amount you owe is near, or at, your credit limit, pay those balances down and watch your score climb up.  The rule of thumb is to try and utilize under 50% of your available credit limit.

How long is your credit history?  Most scoring systems consider your overall credit history or how long you’ve had credit.  Insufficient credit history may negatively impact your score.  Usually, factors like on-time payments (payment history) and low balances (low credit utilization) can offset this, because let’s face it, credit history just takes time.  If you’re hoping to increase your score, don’t give up!  Keep making those payments (on time)!

Besides the above list, factors to also take into consideration are how often you’re pulling your credit and if you have too many or too few credit accounts.  Try to limit your credit inquiries for new credit accounts.  And, watch out for having too many credit card accounts, especially if balances are high. 

Need more information?  Call us! Contact a friendly staff member at 847-670-0456.