How Can I Build a Stronger Credit Score?

If you aren’t already checking your credit score regularly, it’s time to start. Some credit card companies and lenders now include the number on billing statements. SavvyMoney users also have free access to their VantageScore credit score through their online credit union or banking app. Because you’re a BFCU member, you can use the credit score tool in the BFCU Mobile App to see your credit score, set credit goals, and more.

Better Score Impacts Your Life

If you don’t think your credit score can have a major impact on your life, consider all of the ways companies – and even landlords – now use the three-digit number to judge your creditworthiness. 

How high (or low) your credit score is can determine:

• How much will you pay to borrow money for a car or a home loan
• What your car, renters, or homeowners insurance premiums will be (in most states)
• Whether you’ll qualify for a cell phone and service plan
• The amount you’re charged to lease an apartment (and if you qualify)
• Whether you will pass a background check for a new job
• The interest rate you will be charged when applying for a new credit card
• Whether you qualify for utilities (power, water, gas), and how much your deposit will be

What’s notable is that your credit scores (sometimes referred to as your credit profile) aren’t just used by financial institutions anymore. That’s why it pays to not just know your score but to know the steps it takes to improve it (particularly if it’s a long way from where you’d like it to be right now). 

Key Point: It’s also important to note that your credit score is not the same as your credit report, and most credit reports don’t include your credit score. 

What’s a Good Credit Score?

Think of your credit score as a report card for adults on how we handle money. The two main credit scoring systems in the U.S. – FICO and VantageScore – both use a numeric scale from 300 to 850 to determine credit scores. The higher the number, the better the score and the more creditworthy someone is considered to be.

Generally, a good score lands somewhere between 700 and 749, and an excellent score ranges from 750 to 850. If you have a score in the mid-to-upper 600s, you’ll still qualify for credit in many cases, but the approval process may take longer and you’ll likely pay more in interest. 

Building a Better Credit Score

You can boost your score and enhance your credit profile by following these steps:

• Always pay your bills on time. Even one day late is still considered late, and just one late payment can lower your score by as much as 100 points, depending on how high your score was before the deadline passed.
• Pay down credit card debt. It’s not a good idea to use more than 30% of the total credit available to you. Work on keeping your utilization closer to 10%, which can often give your score a boost.
• Keep old credit card accounts open. Your credit score benefits from longer relationships with lenders. If you are tempted to use older cards that are paid off, hide them in a safe place, but don’t cancel them if you can help it.
• Pause before applying for new credit. Why? When you apply for a new card or loan, the lender looks at your credit history, which could ding your score. Only apply for the credit you really need.
• Mix it up when you can. The mix of credit you have in your file, including student loans, auto loans, credit cards, and mortgages, often shows that you can manage debt from multiple sources.

Remember that building a solid credit score takes time and effort, but the rewards are worth it.

– Jean Chatzky, with reporting by Casandra Andrews, savvymoney.com