Save thousands of dollars by building a good credit score
Did you know that achieving a higher credit score can literally save you thousands of dollars over a lifetime in lower interest rates? Also, by having a higher credit score you could benefit from accessing higher lending amounts providing you with more purchasing power for those big-ticket items down the road such as a new home, work truck, commercial building etc.
In this article we’re going to explain what a credit score is, how it’s calculated and some simple steps you can take to increase your score.
What, exactly, is a credit score? It’s a numerical value between 300 & 900 that represents your creditworthiness. It is based on information from a credit report, which is a record of your credit history. Your credit score is used by lenders, landlords, and other entities to help determine the risk of lending you money or extending you credit. Ultimately, a credit score will help a lender determine if you will pay your mortgage, rent or credit card bills on time.
How are credit scores calculated?
A credit score is calculated using information from a consumer’s credit report. The credit report contains information on a consumer’s credit history, including their credit accounts, payment history, and outstanding debts. The credit score is calculated using a proprietary algorithm that takes into account various factors, such as the length of credit history, the types of credit accounts, and payment history. The credit score is then represented as a three-digit number, with a higher number (700 and above) indicating a better credit score.
Steps to increase a credit score:
If you’re just starting out, your credit score could be low, and you may be wondering how to build it up. Here are a few ways you can build a higher credit rating:
- Get a low limit credit card and pay the balance owed off monthly.
- Keep your credit card balances low as high balances can indicate that you may be struggling to manage your debt, which can impact your credit score.
- Make sure to pay your bills and debts on time. Late payments can have a negative impact on your credit score.
- Avoid having too many credit accounts open at once which can have a negative effect on your credit score.
- Lastly, be patient, building a higher credit rating takes time and consistency
It is important to pay attention to your credit score as it can have a significant impact on your financial life. At North Peace Savings & Credit Union, we are here to support you in achieving your financial goals at every stage of life.
North Peace Savings & Credit Union
Book an appointment today! Call 1-877-787-0361.
Cameron Smith, Senior Financial advisor at NPSCU. Cameron is a Senior financial advisor supporting Members with all their lending needs. He is passionate about interweaving financial literacy through his work with members and is proud to be a lead facilitator of Each One Teach One Financial Literacy Workshops. In his spare time Cameron enjoys technology and has even built his own computer. Cameron is passionate about building long lasting relationships with his members and helping…read more