Do you know your credit score? March’s National Credit Education Month provides an opportunity for us to educate ourselves on the importance of our credit scores. If you have ever applied for a credit card, applied to mortgage your home, or leased a car, you know that credit scores play a big role in the interest rates that you will qualify to receive. We recommend checking your credit score every quarter or prior to applying for a loan. Credit Education month is important for the following reasons:
Setting a credit standard
We get that credit scores can be confusing. Knowing your score and how it fares on the spectrum is the best way to determine next steps. The average U.S. FICO score rose to 716 in 2021. With that in mind, you can set a credit score goal knowing that a 100-to-150-point gain is realistic if you establish positive credit-building habits. Ultimately, the higher your score, the lower your interest rates.
Building your credit
Whether you are just starting to build credit or are further along in your journey, establishing a credit history of responsible repayment is key. One of the best credit-building tools available is a credit card. Using your card for regular purchases, paying off your bills in full and in a timely manner followed by requesting a credit limit increase is a great starting point. You may receive points for travel or other items as part of using the card. Make sure you pay off your cards in full each month. Aside from a credit card, you can build credit by paying any existing loans or obtaining an installment loan wherein the loan is paid back through monthly payments.
Continually improving your credit
Having a good credit score is essential for many financial investments including mortgages and car loans. Knowing how to improve your credit score now will save you in interest in the long run and open you up to more investment opportunities. For ways to improve your credit, please visit our “3 Tips to Improve Your Credit Score” blog.
Your financial health is important any time of year but National Credit Education Month in March serves as a great reminder to check in with where you are at. To put together a personalized approach to your financial goals, get started by booking a meeting with the Trost Financialteam.