Having a good credit score is important, especially when you are trying to buy a house, rent an apartment, or lease a new car. These big life purchases may not be possible without an above average credit score, and your score will impact the rates you get on these loans. As a reflection of monetary habits and creditworthiness, credit scores are evaluated by lenders to determine the ability to payback a loan. They are also used by landlords, insurance companies, and employers to make important decisions about you. And a less-than-healthy score may mean missed opportunities and financial setbacks.
First things first: find out what your credit score is! You can also request a free copy of your credit report from each of three major credit reporting agencies – Equifax®, Experian® and TransUnion® – once a year at AnnualCreditReport.com. Each agency will provide your score and a summary of your credit. Excellent credit is considered 781+, good is 661-780, fair is 601-660, poor is 501-600, and bad is anything below 500.
Note: Credit reports can be obtained yearly and provide an opportunity to review reports on a daily basis for mistakes or red flags that may be hurting your score. If there are any errors, contact creditors as soon as possible to get them resolved.
At Lakeland Bank, we offer customers the ability to check their score daily using Credit Sense. Not only can you use this resource to monitor your credit score, but also access your full credit report and customized tips to improve or maintain your score. Check out our credit sense tutorial below or FAQs for details on getting setup.
If your score is not as high as you would like, here are some great ways to help give it a quick boost.
Pay Your Bills Consistently
Make monthly payments on time to demonstrate an ability to successfully manage money. This includes paying rent, utilities, credit card balances, student loans, etc. by their due date. If creditors notice that payments are regularly skipped or delayed, payment habits will be noted as higher risk. When any lender offers a loan, their main priority is to get back the money borrowed so that their bottom line doesn’t suffer. On-time payments are always reassuring. Tip: Set up reminders on your phone to alert you prior to the payment due date so you can make sure your bills are paid on time or make it even easier upgrade the way you organize and pay with Bill Pay. Log into Online or Mobile Banking to enroll and experience the convenience of setting up automatic payments and managing all your bills from one secure location to ensure you never miss a payment.
Establish and Maintain Credit Accounts for the Long-Term
Shop around before making credit-related decisions to ensure what you choose is manageable for an extended period of time. There is often a lot of surface-level appeal to the discounts or perks offered upon opening a credit card. However, the fine print may conceal high interest rates and fees. Don’t make these decisions on a whim, especially at retail stores. They are notorious for getting people to apply for a credit card at the register to receive a special discount on their purchase. Although these offers are tempting, take a moment to consider how another credit card will affect your credit score. Instead, demonstrate that you’re selective when it comes to credit options. On a similar note, it’s important to avoid closing lines of credit too soon. Line of credit longevity is another factor that plays a role in determining credit scores and longer-held credit cards should not be closed unless it is absolutely necessary since it may be more favorable to leave the line open, but opt not to use it.
Remember that Some Debt is Good
Sometimes the word “debt” just sounds ugly, but not all debt is bad—there is a difference between good debt vs bad debt. This is good news because you don’t have to be completely debt-free to prove credit worthiness. Structuring debt in a responsible way will help you demonstrate the ability to manage credit well and show that you respect credit limits. This means not treating credit like cash, maxing out credit cards or taking on more debt than you can afford. Being able to properly manage debt is a skill that is perfected with practice and time. Review these 6 credit card mistakes to avoid and if your credit use is above 30%, use this calculator to develop a plan to pay off your credit card debt.
Improving your credit score or maintaining a good score doesn’t happen overnight. Remember, you may need to modify habits and make adjustments in the months ahead to stay on track. Be easy on yourself – building a healthy credit score takes time and consistent effort, but the commitment you make to your financial wellness will be worth the discipline! Check out our other blog to build and rebuild credit. As always, we’re here to help support your efforts to improve credit or manage existing debt – Reach out to us today or find a local branch near you.