There’s a lot happening in our world right now when it comes to personal finances and money. To compound financial issues for consumers, the Federal Reserve has raised interest rates three times this year, with the biggest rate increase recently on June 15, 2022 by 0.75 of a percentage point, the largest since 1994, according to the New York Times. More increases are planned this year to fight the fastest pace of inflation in 40 years. To help you during these difficult times Camino is here with 3 tips on how to keep your credit score up.
What Affects Your Credit Score?
We get a lot of questions about credit scores, what they mean, and what goes into determining your credit score. It can be very confusing to say the least. Before we explain how to keep your credit score up, we think it’s helpful for you to better understand what criteria credit agencies use to determine your credit score.
- Payment history. Payment history is the most important factor when determining your credit score. According to Experian, your payment history accounts for 35% of your FICO® Score, the credit score used by 90% of lenders.
- Amounts owed. The credit you’ve used, or credit utilization, is the second most important factor in determining your credit score. To figure it out, divide the total amount of revolving credit you are currently using by the total of all your revolving credit limits. Using more than 30% of your available credit is a negative to creditors. (30% of your FICO® Score.)
- Credit history length. This shows how long you’ve had each credit account. (15% of your FICO® Score.)
- Credit mix. Your credit mix refers to the different types of credit accounts and how many you have of each, indicating how well you manage various accounts. (10% of your FICO® Score.)
- New Credit. This is the number of new credit accounts you’ve recently opened, and proportionately, the number of hard inquiries made when you apply for credit. (10% of your FICO® Score.)
How to Keep Your Credit Score Up?
- Pay Off the Credit Cards and Loans with the Highest Interest Rates First
One of the best ways to keep your credit score up is to pay off your credit cards and loans with the highest interest rates. Higher interest rates on credit and loans build up fast. Paying them off will save you money, because you won’t have to pay as much interest.
To learn more about switching to a lower interest credit card, contact a Camino Member Advisor today.
- Pay More Than the Minimum Balance on Your Loans & Credit Cards
Always pay more than minimum balance on your credit cards and loans. If you don’t, your interest will just compound and you won’t get anywhere. Interest rates and fees will continue to add up. Only paying the minimum balance is one of the fastest ways to fall into debt. Remember to keep your debt-to-available credit ratio at 30% max or less on each of your credit cards or your credit score will take a hit.
- Never Miss a Payment
As mentioned above, your payment history is the single most important factor in determining your credit score. Whether your credit account is a utility bill, your car loan, or one of your credit cards. Even one missed payment can have a negative impact on your score. In addition, you’ll rack up late fees and more interest. A simple way to avoid a late or missed payment is to set up automatic payments through your checking account.
Need Help Increasing Your Credit Score? Call Camino Today!
Let Camino help you determine the options to manage your finances and keep your credit score up. We want our members to find the best option that works for them. Please go online at caminofcu.org, give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us for more information.