PGCFCU Blog

You don’t need to file bankruptcy to experience the adverse effects of a low credit score. A few late payments and several high credit account balances can also do a number on your credit health. While a perfect score of 850 isn’t necessary to acquire a low-interest rate credit card or secure a home loan approval, credit scores still matter. Those that fall below 600 can severely limit your ability to live the lifestyle you want.

Fortunately, moving your score in the right direction only takes a few simple actions. Use these tips to boost the three digits that can affect where you live, what you drive, where you work, and more.

1. Bring past due credit accounts current.

   Missing one credit payment might only shave off a few points from your credit score. But a steady stream of late payments on multiple accounts can cause your score to plummet. If you’re behind on payments, adjust your household spending so you can catch up on past-due accounts as quickly as possible. Accounts that remain past due are often sent to a collection agency, which can further hurt your credit score.

   Review your budget and eliminate unnecessary spending to free up cash to bring your accounts current. Consider enrolling in automatic bill pay to ensure all future payments are received by their due dates.

2. Pay off debt.
   

   You don’t need to carry a balance on your credit cards to show credit responsibility. A common misconception is that making payments year-round is the only way to maintain a healthy credit score. This is false. Your credit utilization ratio, which compares your overall credit limit to the available balance, should remain below 30% if you aim to maintain a good credit score.

   For example, if you have a credit line of $1,000, no more than $300 should be used at any time. Keeping your balance at or near the credit limit, say $900, could negatively affect your score. Generally, the more debt you owe, the lower your credit score.

3. Become an authorized user.
   

   If a creditworthy individual is willing to add you as an authorized user on their credit card, you might benefit from their history of on-time payments and low credit utilization. You do not need to submit a credit application to become an authorized user on someone else’s account. Credit card companies that let primary cardholders add authorized users may report payment history and account activity on both credit reports. This can boost your credit score in as little as one billing cycle.

4. Remove errors from your credit reports.

   Inaccurate information on your credit history reports could be contributing to a low credit score. Data errors can do as much damage as accurate negative information. Request your credit history reports from each major credit reporting bureau: Equifax®, Experian®, and TransUnion®, and review each one. If you find mistakes, follow each bureau’s dispute policy to have them removed. Consumers can receive free copies of their reports by visiting AnnualCreditReport.com. 

5. Ask your landlord to report your rental payment history.

On-time rent payments could help raise your credit score, but only if they are reported to a credit bureau through a service like Experian RentBureau®. Since housing payments are often prioritized over other bills even during tough economic times, adding your on-time rental payment history to your credit profile could be the easiest way to positively affect your credit score.

Keep your credit score in shape by borrowing responsibility and repaying debts as agreed. It’s a surefire way to experience the perks of a higher credit score. To learn more and work on a credit management plan, please contact us at 301.627.2666, stop by a branch to speak to a Member Service Representative today!