A credit score is a serious thing in a millennial’s life (yes, more serious then updating your Instagram story). It impacts so many things—including your ability to rent an apartment, how much you pay for car insurance or when you borrow—so improving your score should be a priority. If making your student loan payments or purchasing items for your new apartment have dug your credit score into a hole deeper than the one you find yourself in after a Netflix binge, then these tips from the credit experts at Long Island’s Suffolk Federal can help you dig yourself out.
- Be on time. When you’re trying to improve your credit score, it’s important to pay at least your minimum payments on the due date each month. While raising your score takes time and patience, you can speed up the process by paying more than the minimum. If you can afford to, try to make a payment on your credit card once a week, rather than once a month.
- Pay in the correct order. Let’s say you have two credit cards: one that’s maxed out with a high APR and one you just opened with 0% APR for six months. Consider transferring all or part of your balance onto your credit card with 0% APR. You won’t have to worry about an interest charge for six months, speeding up the process of paying off your balance. But don’t just transfer your balance to any card: Make sure you choose one with no balance transfer fees.
- Ratio is important. Your credit utilization ratio (balance-to-limit ratio) is an important factor when it comes to your credit score, so lowering this ratio is important. For instance, if your credit cards are maxed out, your credit utilization is at 100%, which lenders see as high risk. A good rule of thumb? Keep your credit utilization to 30% of your available credit.
- Know your score. Under federal law, you’re entitled to one free credit report every year from the three credit report agencies: Equifax, TransUnion ad Experian. So take advantage! If you want to track your score more frequently, sign up for a credit score monitoring service. This will help you understand why your number is what it is. If you notice an error, contact the company immediately and find out why they’ve left a negative remark on your report and make sure you get this problem resolved quickly—clearing up any errors can help improve your score quickly.