Taking Control of Your Credit
Ever felt like credit scores make no sense? Or are you chasing an 800+ credit score? If so, read on for some quick tips on how to take control of your credit score.
While it may sometimes seem like credit scores are random, especially when there are over 20 different versions out there, credit scores do tend to follow a general formula based on five main factors: payment history, credit utilization, length of credit history, credit mix, and new credit.
Since payment history and credit utilization have a combined impact 65% of your credit score, understanding how to manage these two factors can really boost or increase your score.
Factor #1: Payment History
35% of your credit score is based on payment history. So it’s very important to always pay on time.
Things to keep in mind: under the Fair Credit Reporting Act, negative information remains on your report for 7 years, so a late payment can severely impact your score.
Tip 1: Set-up auto payments to avoid late payments
Tip 2: If you think you'll be late on a payment, contact your credit card company and/or lender to move the due date.
Factor #2: Credit Utilization
30% of your credit score is based on credit utilization. Therefore, it’s very important to have low balances on your revolving credit lines (i.e. credit card)
Things to keep in mind: experts recommend not using more than 30% of your total credit line across all cards and in each individual card. For the best credit utilization, we recommend having 0-8% credit utilization.
Tip 1: Find out when your credit card reports to the credit bureaus (Equifax, Experian, and TransUnion). This is the date you want your balance to be as low as possible.
Tip 2: Make multiple payments on your credit cards throughout the month. Consider paying as you go, or making bi-monthly payments on your credit cards. In addition to keeping your credit utilization low, this technique will also help you manage your overall debt and save you money on interest charges.
What's My Money Story?
We help those making less than $70K have a safe space to talk about money and hold each other accountable.
Our Money Match Program pairs two people with similar goals and financial situations together to be accountability buddies and talk openly about their goals, and the steps they are taking to achieve them. It's like having a gym buddy but with a focus on achieving your financial goals together.
It's free and open to everyone, but we especially want to create a safe space for People of Color to talk about their goals and achieve them faster.
