The Finance Boost - Be The Boss of Your Money

1. H Ho ow w t to o Bu Buiild ld Y Yo ou ur r C Cr re ed diit t S Sc co or re e F Fa as st t The Finance Boost 1. Get a Credit Card Apply for a credit card that gets reported to the credit bureaus. Credit cards have more credit score-increasing influence than loans. 2. Pay Bills on time Pay all your bills on time every month. Payment history takes the highest chunk of impact (at 35-40%) on your credit score. Missing a payment can lead to a derogatory mark that can stay on your credit for about 7-10 years on your credit report. You can utilize your lender or bank’s online services and apps to schedule auto- pay for your bills, so you don’t accidentally miss a payment. There are also a couple of budgeting apps that provide you with a bills calendar and send you a reminder for your bill payments.

2. 3. Make Use of Your Credit Card and Pay off the Balances Monthly Use your credit cards and pay off 100% of your balances before the statement (closing) date. As long as you make a purchase with your credit card and pay it off, you’re golden. Your credit score would thank you. 4. Keep Credit Card Utilization Below 30% – 10% is Even Better Use your card sparingly and strive to keep your credit usage below 30%, or even below 10% if you can. Your credit card utilization has the second-highest impact (20%-30%) on your credit score. Especially if you’re just building your credit, you should use a credit card only to improve your credit score. What that means is, you should aim to only use your credit card for an amount that you can afford to pay off right away (below 30% credit utilization, of course). That way, you’re not stuck with a balance that you cannot afford to pay off completely at the end of the month. 5. Increase your Credit Limit If you’ve established some credit history and demonstrated continuous credit responsibility with on-time payments and keeping your balances low, then you can always ask your credit card company to increase your credit limit. However, it’s up to the company to approve or decline your request. By increasing your credit limit, your credit card utilization drops as long as you maintain the same level of credit card usage you had before the limit increase. This would also lead to a boost in your credit score.

3. 6. Pay More Than the Minimum Payment Required I’m an advocate for paying off your entire balance on a credit card, so you don’t have to pay any interest on it. However, if you have to carry a balance on your credit card, try to pay more than the minimum payment required by your lender or credit card issuer every month. This way, you can pay down your debt faster and have a lower credit utilization as well. 7. Check Credit Report at Least Once a Year and Fix Issues Make a habit of checking your credit report regularly to make sure that there are no issues with the information. If you find any issues, you should immediately dispute it with the credit bureau. You’re also able to quickly identify if there’s an identity theft issue relating to your credit. You are allowed a free credit report from each of the 3 nationwide credit reporting companies once a year, and you can order the reports from each company at the same time or at different times. You also have access to several other free credit monitoring companies such as credit karma, credit sesame, nerd wallet, and a couple of financial apps such as Mint and Clarity money. My bank (Wells Fargo) also provides a free credit score monitoring service through the bank app, so your bank may be doing that as well. 8. Apply for Credit Cards and Loans Only as Needed Don’t apply for any credit account just for the sake of building credit. You don’t have to go into debt to boost your score. However, if you apply for multiple accounts, try to ensure there’s a 6-month gap between new accounts. 9. Become an Authorized User You can quickly add a couple of points to your score by getting added as an authorized user to a credit card of someone with excellent credit because that card payment history gets added to your file.