To mark National Credit Education Month, I’m passing along some valuable information about how you can understand, monitor, and improve your credit score.
With credit playing such a significant role in our financial lives, it’s good to understand how credit scores are calculated and how your day-to-day choices can cause it to go up or tumble down.
Although it’s not new information, I hope the following serves as a helpful refresher this spring:
- Understanding Your Credit Score – Your credit score is a three-digit number that represents your credit history and likelihood of repaying borrowed money. It’s calculated using your payment history (35%), the amount you owe (30%), the length of your credit history (15%), the types of credit used (10%), and new credit (10%).
- Monitoring Your Credit – Regularly checking your credit report can help you identify errors and alert you to potential identity theft. The Consumer Protection Bureau recommends consumers do so once a year at the very least. According to CPB, annualcreditreport.com is the only provider authorized under federal law to offer free credit reports for the three major bureaus: TransUnion, Equifax, and Experian. Consumers can get a free credit report once a year through the site. Alternatively, Equifax offers free credit scores six times a year through the end of 2026.
- Tips for Maintaining a Good Credit Score – Some basic rules include paying bills on time, keeping balances low on credit cards (below 30% at least and below 10% ideally) and other revolving credit, and only applying for credit when necessary.
One more tip: Getting personalized guidance is crucial if you’re looking to create a more proactive financial plan for 2024. Strategies that have worked for others may not best fit your unique financial situation.
With that said, I’m here to help you navigate the complexities of financial planning. Send us a message or give us a call, and we can discuss strategies to help boost your credit that are catered to your financial reality.