It’s the age old question: “how can I increase my credit score?”

If we’re already two steps ahead of you, lets backtrack for a minute. According to Experian, “credit is borrowed money that you can use to purchase goods and services when you need them. You get credit from a credit grantor, whom you agree to pay back the amount you spent, plus applicable finance charges, at an agreed-upon time.” Your credit score is a unique 3-digit number used to determine how likely you are to repay debt. The score is created by credit bureaus (there are 3 major ones!) who collect your credit information and determine your score based on:

• Payment history (on time or late payments)
• Length of credit (how long you’ve had credit accounts)
• Number of credit accounts
• Total debt
• Credit limits (on things like credit cards)
• Type of credit (such as student loans, credit cards, auto loans)

The range for credit scores are different for all 3 credit bureaus, but a typical range can be anywhere from 300-850 (850 being the “unicorn” of scores).

To help you understand credit scores better, check out this great article from Credit Karma. 

The main thing to know about credit scores is this: the higher, the better. Higher credit reduces your borrower-risk and tells creditors that you’re more likely to pay them back. Higher credit gets you better rates, often times higher limits, and builds a trust worthy relationship with you and creditors + your financial institution. If you want 5 ways to increase your credit score, read on!

1. Pay your bills on time – ALWAYS. Your payment history is one of the biggest factors impacting your credit score. Delinquent payments will lower your score, so try to consistently pay all your bills, credit cards, and loan payments when they are due. Set up automatic transfers or automatic payments to ensure you can do this.
2. Utilize your credit union or bank’s credit builder loans and secured credit card programs. These opportunities are designed to help you boost your credit using fail-safe, secured methods. They typically range from $500-$1500 to help you rebuild (or start building) credit.
3. Let your length of credit age. This one takes time and patience but can help you in the long run. The longer you’ve actually had credit, the higher it’ll be.
4. Don’t open multiple credit accounts at once. It might be tempting to open store credit cards or special offer cards, but opening different accounts within the same period of time means brand-new credit…which equals a brand new credit age (see #3!)
5. Pay off your loans over time – not too early. Although it’s a nice idea to pay off loans early if you can, they are designed to be payed off in increments over a certain period of time. Each payment you make can affect your score. Would you rather have 1 years worth of on time payments (if you paid it off early) or 3 years worth of on-time payments affecting your score (if you were to ride out the duration of the loan)? The more positive marks, the better!

Want to build your credit? We can help! Click here to get in touch with us about how our credit builder loan and secured credit card programs could help to increase your credit score!