Financial well-being July 13, 2015 By
Your credit score is one of the most important number classifications assigned to an individual, second only to your Social Security number. But what does your credit score mean and why should you care about it? Most of us don’t ask these questions or understand the impact of their answers until we make a significant purchase, such as a new home or vehicle.
Buying your first home could be a real eye opener for some people. When you work with a mortgage lender to pull a credit report, you will see that all of the financial decisions you have made up to that point in life have an effect on your credit score.
Make sure you are taking advantage of receiving a free credit report each year. There is a lot to it, such as the importance of understanding the different credit ranges and how they relate to interest rates as part of your loan.
Below are a few things to help improve credit scores:
- It’s best to have at least one revolving credit account versus no accounts at all. A revolving credit account is one that has a different payment each month depending on your current balance. These are accounts you are not required to pay in full each month, such as credit cards. By having an account like this, you establish a credit profile, in which paying down the card balance each month increases your rating.
- Avoid department store cards, as they usually carry high interest rates and high fees.
- Make your payments on time; this applies to all of your bills. You definitely do not want any unpaid collections on your credit report, especially when you are in the process of requesting a loan.
- Limit the number of necessary credit inquires, as this can bring down your credit score.
- Report any incorrect credit information to the credit bureaus.
- Last, but not least: If you don’t understand, ask! There are many resources available to help you make the right decisions.
Remember, your credit score is a reflection of past financial choices as well as those you are making today. Following these useful tips will help you to keep your credit health on track so you can Spend Life Wisely.
Contact First United to learn about our Secure Checking Account, which allows you to access your credit report and provides you with daily credit score monitoring.
