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Tips & Tools to Improve Your Credit Score

Education Posted on March 2, 2021

Although you may not think about your credit score often, it affects nearly every aspect of your financial day-to-day. From interest rates on credit cards to loan amounts for a new home, auto loans to even approval to rent, your credit score is a deciding factor in how easily – and affordably – you can acquire funds to pursue your goals in life.

That’s why we encourage our customers to think of your credit score as a tool you can actively use to build your life, not just a number that goes up and down as a result of financial decisions. These tools and tips can help you do just that, leveraging good credit into an even better future.

Regular Payment of Credit Card Balances

There are 5 key factors in credit scoring, and whether you’re just starting out in building your credit as a young adult, or recovering from bad credit, paying your monthly credit card balances in full impacts the most important ones. This means paying all of the most recent period’s balances, plus any additional interest, so no new debt is added to the balance. This does two things that are good for your credit score:

  • Establishes payment history. A strong payment history, with zero or few missed payments, accounts for 35% of your credit score
  • Reduces outstanding balances. Growing balances can act like a lead weight on your credit score; making sure you at least pay last month’s expenses, plus interest, can pause this decline and even reverse it in some cases where your minimum payment is greater than that last month’s expenses. This affects 30% of your credit score

Increase & Diversify Sources of Credit

The interesting thing about credit is that the more you have, the more you’re eligible to access – which translates to an even better score. The best way to do this is to pay down balances and increase the share of your existing credit currently available to you. You can also do this by requesting additional credit, either through increased credit limits on existing cards or additional cards that you may qualify for.

The availability of diverse types of credit also helps strengthen your score. The same amount of debt across several credit cards might result in a lower score than if the same amount of debt were present half on credit cards and half on loans. It’s a useful thing to remember when relevant loans – like auto loans, home improvement loans, et cetera – might be able to finance projects you’d be tempted to put on credit cards. Oftentimes, these loan products come with lower interest rates, too!

Monitor Your Score Monthly

Banking with Carter Bank & Trust gives you access to Credit Sense, a helpful tool that allows you to monitor your credit score’s progress and review your credit history. It’s particularly useful in checking your history before requesting additional lines of credit, helping you avoid score-damaging “hard inquiries” that result in no additional credit and thus a temporarily decreased score. Credit Sense also tells you in-depth details on why your credit score is what it is, helping you inform your financial plans and identify easy wins in your finances to help boost your credit score.

Combined with other services and financial assistance you can find at Carter Bank & Trust, can be a vital tool in boosting your credit score and opening your financial horizons. Our doors – physical and electronic – are open wide all throughout the western half of the Commonwealth as well as North Carolina, so schedule a call or an appointment with your branch today to learn more about what we have to offer.

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