Financial Tips

Are You Credit Savvy?

In today’s world, having a respectable credit score is key to many financial decisions that affect your overall purchasing power.  Credit bureaus look at several key factors when determining your credit score including, but not limited to: 


1. Your payment history: Do you have an extensive and clean history or a short history with past-due payments?


2. Age of your credit: How old are your credit accounts?


3. Credit mix:  What types of credit do you have?  Personal loans, credit cards (both retail and major credit companies), car loans, mortgage or home loans, etc.?


4. Outstanding debt:  Are your credit cards all maxed out or do you have several cards with minimal balances that get paid each month?


With these questions in mind, let’s review a few tips on how to improve your credit score.


1. Pay your bills on time:  By paying your bills on time you will accomplish a few things at once.  It makes lenders more likely to lend to you in the future.  It also means you avoid paying late fees and other finance charges, which makes paying off your debt harder.


2. Avoid unnecessary or excessive credit:  Having several high-balance credits cards that are close to exceeding your available credit limit shows creditors that you cannot manage your debt appropriately.  You should limit yourself to one or two (three at most) credit cards, an auto loan and/or a mortgage.


3. Pay down your outstanding debts:  Each month, apply more money to the balance than just the minimum payment due.  This will decrease the interest you will payback over time, as well as, create a larger spread between your outstanding balance and credit limit.  The lower the percentage of debt you are using compared to your available credit, the better.  If you can pay off your balances each month that is even better.


4. Manage a variety of debt:  In general, lenders like to see that you can manage a variety of credit types such as a personal loan, credit card and a larger debt like an auto loan or mortgage.


Once you are able to build your credit you want to keep your credit safe.  Be vigilant in preventing identity theft.  Practice safe recordkeeping by shredding old financial information, keep passwords and PINs in a safe place, and check your credit regularly.  If you notice any inconsistencies, contact the credit bureaus immediately.  The sooner you can correct a mistake the better.



Univest Bank and Trust Co. is Member FDIC


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