Five Simple Steps to Elevate Your Credit Score Today

Kim Chapman shares five actionable strategies to boost your credit score quickly and effectively. These proven techniques address the key factors that influence your credit rating, helping you qualify for better loans and financial opportunities.

• Pay bills on time as this accounts for 35% of your credit score
• Keep credit utilization below 30% of your available credit limit
• Don't close old accounts as they contribute positively to credit history
• Limit opening new accounts as they can temporarily lower your score
• Check all three credit reports regularly through annualcreditreport.com
• Contact creditors immediately if you can't make payments to discuss options
• Consider speaking with a financial counselor if struggling with debt management

Visit neighborsfcu.org/financial-wellness for more tools to help build a strong financial future and subscribe to the Money Matters podcast for ongoing financial guidance.

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Welcome to Money Matters, the podcast that focuses on how to use the money you have, make the money you need and save the money you want – brought to you by Neighbors Federal Credit Union.

The information, opinions, and recommendations presented in this Podcast are for general information only and any reliance on the information provided in this Podcast is done at your own risk. This Podcast should not be considered professional advice.

Episode Transcript

Speaker 1 (00:02):
Welcome to Money Matters, the podcast that
focuses on how to use the moneyyou have, make the money you
need and save the money you want.
Now here is your host, ms Kim.

Speaker 2 (00:12):
Chapman.
Hi, welcome to another editionof Money Matters.
I am your host, kim Chapman,and guess what?
I am flying solo today becauseI just wanted to stop by to give
you five quick tips of thingsyou can do now to boost your
credit score.
You know, that thing you needwhen you want to borrow money.
That ranges anywhere from 300to 850.

(00:34):
If you don't like your scoreand you want to increase it,
here are a couple of tips ofthings that you can do For
starters.
Number one pay your bills ontime.
Did you know that that accountsfor 35% of your credit score?
Lenders are going to report ifyou're even a day late in some
cases.
So make sure you're paying yourbills on time.

(00:54):
Not only can it help boost yourcredit score, it can save you
money because, think about it,when you pay your bills late,
sometimes you have an added latefee and then that takes money
from your cash flow, which mayprevent you from paying down
other debts.
So, yes, pay your bills on time.
Number two pay down your debt,especially if you have credit

(01:17):
cards.
We call that credit utilization.
So think about your credit card.
You have a limit.
If you have a limit, of $1,000,how much of that should you
spend?
I know, when I was reckless in18, I thought it meant $1,000.
But actually the rule of thumbis you don't want to use more
than 30% of your availablecredit.

(01:38):
So again, if you have a limitof $1,000, that's going to be
$300.
So you don't want to go crazyand go up to $500 or $1,000
because you could actually behurting your credit score.
I see lots of individuals allthe time they have credit cards,
they make their minimum payment.
Sometimes they even make morethan their minimum payments, but

(01:59):
they're wondering why theirscore won't grow.
And it's because they're abovethat 30%.
So take a minute, look at yourcredit card balances, look at
your limits.
If you want a quick and easyway to boost your score, start
working aggressively to getthose balances down to under 30%
, and you want to keep it under30%.

(02:20):
The lower you can get it, themore it will enhance your credit
score.
If you can get it down to 20%or even 0%, that's going to make
your credit score even better.
So, yes, pay down thosebalances, pay down the debt.
Keep your credit utilizationlow.
Third thing is don't close thoseold accounts.
I know if you go and look atthose accounts and you say, okay

(02:42):
, I'm going to pay it down tozero.
Should I keep it open or shouldI close that account?
Part of your credit score ishow long you've had credit.
So if you've had a credit cardfor five, maybe even 10 years
and you've paid that balancedown as long as you don't think
you're going to be tempted to goback and recharge on that
account and create a big balance, keep that account open.

(03:03):
Having an account and create abig balance, keep that account
open.
Having an account open for along period of time where you've
had a good payment history canreally really help grow your
credit score.
If you've only had an accountfor a year or two, then you may
want to evaluate something alongthose lines.
But the old accounts you wantto keep those open.
They really bring value to yourcredit score.

(03:31):
Now the next thing has to dowith new debt.
Sometimes people have themisconception that, hey, I want
to boost my credit score, so I'mgoing to go and open a bunch of
brand new accounts.
That can actually trigger a redflag to lenders, because new
accounts mean new money, newdebt.
So you want to monitor how manyaccounts that you open in a
short period of time, which isgenerally considered two years,
24 months when you open newaccounts.

(03:54):
Not only does it create a hardinquiry in most cases and hard
inquiries can impact your creditscore it can lower your credit
score.
So again, keep an eye on howmany new accounts that you open
in a given time period.
It can also re-age the averageage of how your account is.
So if your oldest account is 10years and then you turn around

(04:16):
and open a new account today, itmay re-age that account and
make it five years or four years.
So there can be some negativeconsequences when you're opening
new debt, especially if it'snot necessary.
And then we want to talk aboutchecking your credit report.
How often do you look at yourcredit report?
I'm not talking about the score.

(04:37):
I want you to focus on thereport.
Look at it line by line.
Look at the information Is yourname and address correct, your
social security number?
Look at the accounts.
Do you and they're markedclosed?
Or do you have accounts thatare marked closed and you
thought they were open?
Look at your balances.
Now, keep in mind with yourbalances they may be off

(04:58):
slightly because maybe your mostrecent payment hasn't posted,
but if you think you should owe$400 and they have you owing
$2,400, obviously that's a hugediscrepancy.
So you want to make sure thatyou identify any mistakes, any
errors, and also make sure thatyou're not a victim of fraud,
that someone hasn't opened anaccount in your name that you

(05:21):
may not even be aware of.
Now, where can you find thisinformation?
Yes, there are tons of differentapps out there.
There's Credit Karma, there'sCredit Wise.
There are tons of differentplaces you can look, but my
strong recommendation is thatyou go to annualcreditreportcom.
When you go toannualcreditreportcom, you will

(05:42):
get access to all three creditreports.
That's Equifax, transunion andExperian.
Some of the other apps onlygive you access to one or two of
the different bureaus, whereasat annualcreditreportcom, you'll
get access to all three.
When you're reviewing yourcredit reports with an S, you
want to make sure you look atall three, to make sure the

(06:04):
information is consistent acrossall three of them, because the
one report that you don't lookat could be the one that can
cause you to have a loan denial.
Report that you don't look atcould be the one that can cause
you to have a loan denial Again.
These are just some quick tips,actionable things that you can
do now to help boost your creditscore, because our goal here is
to help you use the money youhave, make the money you need

(06:25):
and save the money you want, andthat's all I have for you today
.

Speaker 1 (06:31):
It's time for Blueprint Building Blocks Small
changes that lead to bigfinancial wins.

Speaker 2 (06:39):
Let's stack up for success.
Keeping your credit scorehealthy is very, very important.
So if you find yourself in asituation where you can't pay a
bill, here's some quick tips ofthings that you can do.
One, reach out to that creditoror lender and see if they can
grant you an extension or changeyour due date.
Find out if they have ahardship program that may

(07:02):
actually lower your paymentaltogether.
Three, go see a professionalfinancial counselor and see if
they have tools or resourcesthat they may be able to help
you get back on track with.
Or four, if you can borrowmoney, because, again, paying
back the money to a friend maynot damage your credit nearly as
much as having a late pay onyour credit report.

Speaker 1 (07:25):
That's a wrap on today's Blueprint Building
Blocks.
Stay on track with yourfinancial journey.
Subscribe to the Money Matterspodcast and visit
neighborsfcuorg slash financialwellness for more tools to help
you build a strong financialfuture.