March is Credit Education Month, a great time to make sure you’re taking the right steps to improve your credit score. What are the benefits of a good credit score? There’s a ton; Lower interest rates on credit cards and loans, better chance for credit card and loan approval, more negotiating power for interest rates, the potential for higher loan limits, easier approval for rentals, better car insurance rates, and much more.

What is a good, very good and exceptional credit score? See the chart below from Experian!

credit score chart

 

Next, we lined up a few simple tips that may help improve your credit score.

  1. Have student loans? Pay them diligently! Paying on time can help consumers qualify for other lines of credit later on. While you are incurring the debt, make the interest payments monthly. This may allow you to cease compounding on the interest during the life of the loan and therefore minimize the amount of debt you will incur during your college years.
  2. Take out an installment loan on auto, mortgages, and personal loans. An installment loan is a financial product that permits individuals to borrow a large sum of money that they can repay over time. This loan usually carries a fixed interest rate and requires regular monthly payments.
  3. Try only carrying one credit card in your wallet. Do not get sucked into signing up for multiple credit cards – namely department store cards. They are not necessary.
  4. Your credit history matters. Be sure to use the same credit card and do not cancel it. Canceling a credit card can cause a direct hit to your credit score.
  5. Consider helping your children build credit once they turn 18. Keep them involved with skin in the game! If purchasing a car, we recommend considering financing part of the loan under the child’s name. The same can be done with student loans.
  6. If you’re building your credit from scratch, look into obtaining a secured credit card. A secured card is backed by a cash deposit you make upfront; the deposit amount is typically the same as your credit limit. Secured cards are meant for short term use, only to establish credit and help it build up.
  7. Practice good credit habits: Making 100% of your payments on time.

 

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