March is officially National Credit Education Month! Our team at Great Basin FCU decided there couldn’t be a more appropriate time to talk about credit. Learn how to build and repair your credit with some credit education tips from yours truly!
Your credit score is a number associated with the borrower’s (your) risk. If a financial institution like a bank or credit union were to lend to you, how likely is it that you will pay a loan back in full and in a timely manner?
How do you know if your credit score is good or bad? Credit scores can usually range from 0 to 850, though credit scores will most commonly land between around 400 and 800. A good credit score is on the higher end of the spectrum, and a poor credit score will be lower. A credit score of 720-850 is considered excellent, and a credit score above 690 is good. If your credit score is below 690, this may indicate some credit problems such as late payments on a credit card or loan in the past or maxed out credit limits. A score of 350-650 indicates a damaged credit history, perhaps from a bankruptcy, collections, or a combo of many things.
It is much easier to learn about credit slowly but surely than to learn the hard way and hurt your credit score. At Great Basin FCU, education is one of our Core Values. Credit education for young adults matters to us at Great Basin FCU, so we spend a considerable amount of time on this topic. Our Youth Focus Committee travels out to schools to start the credit conversation in the classroom! Our team teaches kids about money, including topics like credit.
Building Your Credit
There are a few different tactics you can use to approach building or improving your credit. At Great Basin FCU, a great option for improving your credit is our ReBuild Together Loan, tailored specifically for young adults with no credit or adults with a damaged credit history.
This type of personal loan at Great Basin FCU is tailored specifically for credit union members with poor credit or no credit history at all. We lend you an amount between $1,000 and $3,000 for a term between a year and three years. The money we lend goes into a special savings account until you have made your payments to fulfill the loan. At the end of the loan term, you’ll have the money you paid in plus a good payment history on your credit.
How to Improve Your Score
Your credit score is a three-digit number that ties to your financial responsibility and credit history.
Pay Off Your Credit Balance
If you pay off your outstanding balance on your credit card more than
once a month, your credit score will improve. Paying off your credit balance
too frequently does keep you from building credit, so make sure to carry
some balance in order to show use of the line of credit.
Even if you do not pay off your entire credit card balance each month, you can keep your credit card balance low to establish that you use around or less than 30% of your offered credit at any given point. If you keep your balance low, your credit score will get better!
Reduce Your Debt
Outstanding debts take a toll on your credit score over time. Limit the amount of debt you carry by paying off any outstanding loans. If you have multiple outstanding loans like student loans and business loans, consider paying off one loan completely to cut interest from that loan.
Get Another Credit Card
Your credit score includes a calculation of how much of your line of credit you are using at any given time. If you open a new credit card, your proportion of amount of credit used versus amount of credit offered will help raise your credit score.
Pay Bills On Time
Your credit score is a number that
reflects your financial behavior,
including if you pay your bills on time. Avoid taking a hit to your
credit score from paying bills late by marking your bill dates on your
calendar. Don’t forget to add time for payments to process as well!
People can fall on tough times, and money can get tight. The tough time is the reason why we have a credit card for emergencies — to help us through. If you endured a period where you took a hit to your credit score because you had to use all of your resources to make ends meet, look at clearing up your records with a creditor.
You can repair your credit score by negotiating with a creditor. If you have a relationship with your bank or credit union and a reputation as someone who pays on time, you can negotiate with your creditors. Borrowers who have established a strong reputation for paying bills and balances on time can may be able to erase some of the harsh penalties in a credit score for a late payment here or there when the going gets tough.
Happy National Credit Education Month from our Great Basin FCU family to yours. We are here to help you learn how to improve your credit.