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Borrowing and Debt Reduction

Ways to Build Credit

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Keeping a healthy credit score is integral to maintaining your financial wellness and moving toward your life goals.

And if your credit score isn’t quite where you want it to be, the good news is that it’s not set for life; your credit score can always improve with the help of smart financial practices. If you’re looking for ways to build and maintain a healthy credit score, take action with these tips.


1. Stay on top of your bills.

While it might sound obvious, you need to pay your bills on time, every time. This is one of the simplest ways to build credit, as it shows lenders that you are a responsible borrower. Making timely payments has a positive impact on your credit score, so be sure to stay on top of deadlines or set up an auto-pay system for your accounts. Remember, your bill payment history accounts for approximately 35% of your credit score, and even just one late payment can leave a negative mark.1

2. Keep track of spending.

Budgeting is important in any financial situation, but it’s especially helpful when it comes to managing your credit cards. If you start to see that your monthly spending is getting close to your credit limit, it may be a good idea to increase your limit or consider scaling back on expenses. Your credit utilization ratio (how much available credit you actually use) has an impact on your credit score. Utilizing a small portion—we recommend 30% or less—of your available credit will go a long way in strengthening your score.


3. Pay off debts quickly.

According to a NerdWallet study, the 2018 average total of credit card debt owed by a U.S. household was $6,803. If you’ve missed any payments in the past, your credit score has probably dipped a little; however, you can minimize the impact of that debt by paying it down quickly.  Get back on track by cutting out unnecessary expenses and creating a payment plan. A good credit building practice is to never borrow more than you are able to pay back. Ultimately, the amount of debt you carry matters as it determines about 30% of your credit score.1


4. Diversify the credit you use.

Having a solid credit mix plays a positive role in your credit health, demonstrating your ability to manage multiple types of debt at the same time. It’s not necessary to have each one, but a mix of credit cards, retail accounts, installment loans, mortgage loans, and student loans may help improve your score. Evaluate the different types of credit you have open and make sure it’s a healthy mix of open and closed-end credit. Open-end credit refers to any loan where you can make repeated withdrawals and repayments, like a credit card. Closed-end credit refers to a loan that is fixed for a period of time with regular payments, like a car loan or mortgage. Your credit mix accounts for approximately 10% of your credit score.1

5. Try a credit monitoring service.

Credit monitoring services such as Privacy Guard, Credit Karma, and Identity Force are designed to help protect you from identity theft by keeping a close watch on your credit report. After signing up for a service, they watch over your credit activity and alert you of any changes to your accounts, helping you avoid fraud and identity threats. This is especially important because the Identity Theft Resource Center (ITRC) uncovered that the number of credit card numbers exposed in 2017 totaled 14.2 million, which was up 88% from the previous year.2 Some services even offer personalized advice on how to maintain a healthy score. Monitoring your report may not be an instant way to build credit, but being proactive can help you quickly identify and solve potential threats before they have a chance to hurt your credit score.


6. Be patient.

The length of your credit history makes up about 15% of your credit score.Depending where you are on your credit journey, it will take some time to age your credit history. In the meantime, focus on your financial habits and see where improvements can be made. Paying bills on time every time, paying off debts, keeping track of spending, and routinely monitoring your credit are all great ways to build credit over time.

Continue your credit journey.

Our team of dedicated bankers are always here to help if you ever have any questions on how to build credit or keep up positive financial habits. They can walk you through actionable steps to improve your existing plans, or help you get started.


Still have questions?

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