Managing Your Credit Score

Your credit score is an important reflection of your financial health, influencing everything from loan approvals to the interest rates you’ll pay. A higher score can help unlock better opportunities. 

Here are some top tips for managing your credit and improving your score:

Review Your Credit Report

Your credit report provides a snapshot of your loans and credit accounts, helping you identify areas for improvement. You’re entitled to one free report from each of the three major credit bureaus – TransUnion, Experian, and Equifax – every year. To keep track of your progress, consider spacing out your reports throughout the year. Consider reviewing more than just your score on the report. Look at the details carefully to catch and correct any errors that might be lowering your score.

Make Payments on Time

Your payment history is the most significant factor in your credit score. Paying bills on time and covering at least the minimum monthly payment can have a major impact. If you struggle to remember due dates, Investopedia contributor Rebecca Lake has some helpful tips. Set up due-date alerts, automate your payments, and organize your bills, whether you receive them via paper or email, to ensure you never miss a payment.

Monitor Your Credit Utilization

Along with payment history, your credit utilization plays a key role in your score. It’s recommended to keep your balance under 30 percent of your credit limit, but to maximize your score, aim for under 10 percent. If you need to make a big purchase, NerdWallet’s Amrita Jayakumar suggests spreading the cost across multiple cards or paying down the balance in stages before the due date to keep your utilization low. Some credit card issuers also allow you to set notifications when your balance nears a certain percentage of your limit, making it easier to stay on track.

Limit Credit Inquiries

Frequent credit applications can negatively affect your score, as they suggest you may be struggling financially. To protect your score, try to space out your credit applications by at least six months. However, there’s an exception: applying for multiple loans within 14 days will only count as one inquiry, so feel free to shop around for the best rates without worrying about your score.

Other Ways to Improve Your Credit Score

If you don’t have a long credit history, there are still ways to prove your creditworthiness. Programs like Experian Boost and UltraFICO allow you to add financial data that typically isn’t included in your credit score, such as utility payments or bank account management. These programs can help demonstrate your reliability as a borrower, even with limited credit history. For additional help with managing your credit, you may want to consult a financial advisor or contact a credit repair company to get personalized guidance on improving your finances.

Here to Help

At Five Star Bank, we offer resources and tools to help you manage your credit and set yourself up for financial success. To learn more about credit scores and report, take our free interactive course.

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