AUGUST 29, 2022

Why should you worry about your credit history? Basically, a good credit history gives you options and saves you money.

Many businesses and organizations check your credit score when you are making a purchase or borrowing money. Your credit history will help them to decide if you are responsible and how much risk you present. A strong credit history and high score allow you to get lower interest rates on credit cards and loans - and lower payments.

The first step is to know your credit history. Many credit cards and services offer free access to your score to one or more of the three major credit reporting agencies. This score can differ slightly from the score creditors may use, but it will give you a benchmark so you can measure your progress.

What can I do to improve my credit score?

If you want to improve your credit score, it takes time and consistency. Don’t believe any company that tells you there is a quick fix for your credit score.

• Make every payment on time.
• Pay down the balances on your debts, such as car loans or credit cards.
• Don’t apply for more credit. When credit card companies do a “hard pull” on your report, it lowers your score.
• Don’t cancel credit cards, even if you pay them down. Part of your score is how much you have available versus how much you still owe. If you pay off a $2,500 card, you have $2,500 more available, which makes you look good. If you cancel the card, you have $0 available, lowering your total available, which can hurt.
• Keep track of your score every month. Many credit cards offer free credit monitoring. They may not show you all the credit bureaus, but you can get an idea of whether your score is going up or down, and then figure out what’s causing it.
• Make a budget and maximize your payments on your high interest credit cards. That money is still available on your credit card in case of an emergency. It doesn’t disappear.

What will lower my credit score?

• Late payments
• Maxing out credit cards.
• Applying for a lot of new credit
• Filing for bankruptcy
• Not paying bills that then go to collections
• Having a car repossessed or a home foreclosure

Do believe that you can quickly tank your credit score! Just a few late payments or collections may dramatically lower your score. Some bad marks stay on your report for years.

For more details on the how and why of your credit score, FICO, what appears on your credit history, and more, check out the full credit history rundown from Greenpath.