Top 5 Tips to Increase Your Credit Score

Did you know your credit score is one of your greatest assets? Your credit score will determine what rate you pay when borrowing money. Many financial institutions are now using a risk based lending system to determine your credit worthiness. The higher your credit score, the lower the risk is for the financial institution. Simply put… the better your credit, the lower your loan rates.

If you currently have no credit or a lower credit score, there is good news! There are some easy steps you can take that will put you in a better financial position. Check out our top 5 tips to increase your credit score!

Pay your bills on time:

Late payments are a very quick way to lower your credit score. By making your payments on time, EVERYTIME, you will keep your credit score high. Be sure to take advantage of the many tools your financial institution has made available to you! At BCFCU, we offer online bill payment, making it easy for you to schedule your payments! We also have online banking and mobile banking to ensure that you can easily access your accounts and transfer funds.

Pay down your debt:

Another way to maximize your credit rating is to lower your debt to income ratio. You can either increase your income or decrease your debt (the amount of money you owe someone else). If you have high credit card balances, that’s a great place to start. Create a plan to put extra money toward these payments every month. And as always, if you need help getting started, meet with our expert loan officers to create a plan to conquer your debt!

Don’t max out your credit cards:

This is all about “credit capacity” or the amount of credit you have available to you. When you max out a credit card, you have just decreased your capacity. Having credit available to you increases your credit score. You want to make sure your credit cards have no more than a 50% saturation rate. It would be better to have two cards that each have $5,000 max limits with $2500 on each card. You would still have $5,000 credit available to you and you would not be maxed out.

Don’t close out unused cards:

A great way to increase your credit is to show credit longevity. This just means you have had credit available to you for a long time and have shown that you can use it responsibly. So that $500 starter credit card you opened in college… keep it open! Those department store cards you open 10 years ago to get the 15% discount… keep them open! You don’t have to carry a balance, but don’t close it! This will help to keep your score high. And if you don’t have a credit card, our Blue Chip FCU VISA is a great place to start! With our intro rate of 2.99% APR, this is a great card to begin your credit journey.

Keep credit inquires low:

It is expected that you may “shop around” for credit rates when buying a house or car. You want to get the lowest rate available! Getting credit inquiries within a few days or weeks won’t lower your score. BUT… if you are regularly having credit companies pull your credit for personal loans, this could indicate that you are in a desperate situation. So keep those inquiries focused to a specific time period for a specific purpose. And don’t forget about loyalty rewards points. BCFCU offers special discounts on our loan rates based on your relationship with the credit union. This is a great way to get even lower rates!