Ways To Boost Your Credit Score
BETTENDORF, Iowa (KWQC) -
Today, Thursday, October 15th is National Get Smart About Credit Day. And since many of us are damaging our credit scores without even knowing it, PSL invited local financial professional, Drue Kampmann from True Financial Partners, to the show to discuss why your credit score matters and the best way to improve it during a pandemic. Topics discussed:
Q: WHY IS OUR CREDIT SCORE IMPORTANT?
Credit scores are being pulled for anyone applying for a mortgage, renting an apartment, opening a new credit card or getting a car loan.
Before the pandemic, Americans were struggling with debt. Now that millions have lost their jobs, many are struggling to pay their bills, adding to their financial worries. Falling behind on financial obligations is one of the easiest ways to wreck your credit score.
Q: WHAT IS A GOOD SCORE?
Each credit scoring agency has different criteria for determining what a good score is.
The industry standard is five categories: excellent, very good, good, fair and poor. If you fall between 670 and 739, that’s considered good.
A score of 700 or higher will usually get you approved for most credit cards or low-interest loans.
Q: HOW CAN WE PROTECT OUR CREDIT SCORE?
Spend Below Your Limit
- One of the best ways to improve your credit score is to keep your balances low in relation to the credit you have available.
- The recommended ratio is to keep your spending under 30% of your overall credit limit; with a goal of as low as 10%.
- To achieve this, be disciplined to spend less than you earn. Never use a credit card as a substitute for cash.
Pay Bills on Time
- Nearly half of cardholders believe carrying a balance can raise your credit score.
- This couldn’t be further from the truth! If you are already in good standing with your credit, skipping just one payment could drop your score by 100 points.
- Pay your bills on time and make your monthly payments in full. This will always be a positive on your credit report.
- Most credit cards come with an app or way to automate your payments. This will help you stay on track, avoid late fees and prevent you from accumulating debt.
Avoid Opening New Cards
- Don’t open a new credit card or apply for a loan if it isn’t necessary.
- Credit card companies constantly offer deals or rewards for opening a new card, but don’t be tempted if you don’t need the credit.
- Opening new credit card accounts can lower your score, and you don’t want to have an excessive amount of credit available to you. That puts you at a higher risk for racking up a lot of debt quickly.
Q: WHAT KIND OF DEBT PROTECTION IS OUT THERE FOR PEOPLE IMPACTED BY COVID-19?
- The CARES Act includes language to protect consumers from having their credit score negatively impacted if they need to defer payments.
- Many of the assistance programs offered by credit card companies when COVID-19 first hit are set to expire in the coming months. But there are still federal government protections in place for student loan borrowers and renters through the end of the year.
Q: WHEN SHOULD WE CHECK OUR CREDIT SCORE AND WHAT SHOULD WE LOOK FOR?
- You want to make sure the information on your credit report is up-to-date and accurate and that there aren’t any mistakes.
- Keep an eye out for accounts that don’t belong to you and close accounts you find that are not yours. Also, keep an eye out for duplicate accounts and missing payments.
- Even your Social Security number and personal information can be wrong, which could make you responsible for someone else’s debt.
- Everyone should check their credit report at least once a year.
- Go to truefinancialpartners.com to get your free credit report from each of the three credit bureaus.
TRUE FINANCIAL PARTNERS / 3475 Utica Ridge Road / Bettendorf, IA / (563) 359-TRUE (8783) or Toll Free: (877) 359-8783
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