A man holding a credit or debit card using a calculator and a pen to check a bank statement.

Tips for Improving Your Credit Score

Published November 21, 2023

By Madison Bruno | Personal Banker | Littleton

Your credit score plays a crucial role in your financial well-being. It affects your ability to secure loans, obtain favorable interest rates, and even impacts your housing and employment prospects.

Improving your credit score is a worthwhile endeavor that can have long-lasting positive effects on your financial future. Here are seven effective tips to help you enhance your credit score and maintain a healthy credit profile.

Check and Monitor Your Credit Report:

Regularly reviewing your credit report is essential to understand your current financial standing. It allows you to identify any errors, inaccuracies, or fraudulent activities that may negatively impact your credit score. Websites like AnnualCreditReport.com provide free access to your credit report from each of the major credit bureaus (Experian, Equifax, and TransUnion) once a year. Be proactive in resolving any discrepancies promptly.

You don’t necessarily need a lot of money to have good credit. If you have good financial discipline across all areas of your finances, you can achieve a great credit score which will help you in the future, especially if you plan on making any big purchases.

Madison Bruno

Pay Bills on Time:

Consistently making timely payments is one of the most crucial factors affecting your credit score. Late payments can significantly damage your creditworthiness. Set up reminders, automate payments, or use budgeting apps to ensure you never miss a payment. Redstone Bank offers BillPay via our online banking and mobile app to allow you to set up and manage paying your bills automatically easily. Even if you can’t pay the full amount, make at least the minimum payment to avoid negative consequences.

Reduce Credit Utilization:

Credit utilization refers to the percentage of your available credit that you’re using. Aim to keep your credit utilization ratio below 30%. High credit utilization suggests a higher risk to lenders and can negatively impact your credit score. Paying down debts and using credit sparingly can help lower your credit utilization, demonstrating responsible credit management.

Diversify Your Credit Mix:

A healthy credit mix shows that you can handle different types of credit responsibly. It’s beneficial to have a mix of credit accounts such as credit cards, loans, and mortgages. However, don’t open unnecessary accounts just to diversify. Only take on new credit when needed and ensure you can manage it effectively.

Limit Credit Applications:

Each time you apply for new credit, it triggers a hard inquiry on your credit report. Multiple hard inquiries within a short period can suggest financial distress and lower your credit score. Be cautious when applying for new credit, and do your research beforehand to increase your chances of approval.

Keep Old Accounts Open:

Closing old credit accounts may seem like a good idea, but it can actually harm your credit score. Long-standing accounts demonstrate your credit history and contribute positively to your score. If you have old accounts with no annual fees or negative implications, it’s often wise to keep them open to maintain a longer credit history.

Seek Professional Guidance:

If you’re struggling with significant credit issues or finding it challenging to improve your credit score, consider seeking assistance from a reputable credit counseling agency. These professionals can provide personalized guidance, help negotiate with creditors, and offer strategies to improve your credit score effectively.

Building and maintaining a good credit score is a long-term commitment that requires discipline and responsible financial habits. By following these tips and consistently practicing good credit management, you can steadily improve your credit score over time. Remember, a better credit score opens up opportunities for favorable financial terms and greater peace of mind in managing your personal finances. Take control of your credit today and pave the way for a brighter financial future.

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