Credit scores are your financial reputation, which allow potential lenders, employers, insurance agencies and even landlords to gauge your likelihood of following through on an agreement. A poor credit score can follow you around for years, preventing you from new opportunities and reaching your personal and professional goals.

Mending past financial mistakes to improve your credit report and score may not be easy, but is possible with the right steps. However, some methods you may think are helping your credit score rise could be damaging it further. Here are the dos and don’ts of building credit:

What to Do

  • Get Familiar With Your Debt: Find out if you have any outstanding payments, such as pricey medical bills, weighing your credit score down.
  • Pay on Time, Every Time: Paying as soon as the bill comes — or even before — can go a long way in improving your score. Making early credit card payments is a great way to work down your purchase debt, rather than paying for interest. If you cannot remember to pay on time, consider registering for automatic payments.

At APGFCU, we take the work out of making loan payments with Online Bill Pay – set up your recurring payments once and we will take it from there. Simply log in to Online Banking to set up your payments under the “Pay Bills” tab.

  • Pay as Much as You Can: Try to exceed the minimum balance due on your credit card bills to become debt-free faster. This is a great way to boost your score if you can swing it.
  • Consolidate Your Debt: If your debt is too much to handle, consider consolidating or refinancing into one lump payment. This typically allows you to make lower monthly payments on your credit card bills. Check out our Debt Consolidation Calculator to determine if this is right for you, then learn how we can help you consolidate higher-rate debt into one easy payment with an APGFCU Credit Card.*

What Not to Do

  • Avoid Credit Cards: While it may not be necessary today, you will need proof of established credit down the road for home loans, auto loans and employment. It’s beneficial to invest in a credit card now to build your creditworthiness.
  • Reject a Higher Limit: A higher credit limit could boost your credit score through the credit utilization ratio, which makes up 30% of your credit score. The utilization ratio compares your credit card balance to its limit. In other words, the lower your balance and higher your limit, the better!1
  • Close Your Accounts: Once your debt is paid off, you may want to close your account and get rid of your card. However, this may not be the best idea for your score. The length of your credit history makes up 15% of your score, so it is beneficial to keep your accounts open for as long as possible.2 Additionally, closing an account could damage your balance-to-limit rate.

Managing debt and improving your credit score on your own is no easy feat. We’re here to help make enhancing your financial health a little easier. Visit our website to review available no-cost financial education courses, both online and in-person, to help get you back on track.

*All loans are subject to credit approval.

1https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/
2https://www.lexingtonlaw.com/education/length-of-credit-history