There’s nothing a company can do to improve your credit score that you can’t do yourself. On this MoneyWise, we’ll explain this and help you see money from God’s perspective.
Plenty of companies claim they can boost your credit score, but it’s for a price. Some are scams and some are legitimate. Either way, you just don’t need them. The truth is, there’s nothing anyone can do to improve your credit score that you can’t do yourself and should be doing. On this MoneyWise, we’ll explain this and help you see money from God’s perspective.
What exactly is your credit score? It’s a single number, usually between 300 and 850, that essentially tells a prospective lender how good a risk you are and how likely you’ll be to repay money loaned to you on time and in full.
Five factors make up your score: payment history (35%), amounts owed (30%), length of payment history (15%), the different types of credit accounts (10%), and new credit (10%).
First, pay every bill that comes in on time. Simple enough, right? We should always do that anyway. Proverbs 3:27 tells us, “Do not withhold good from those to whom it is due, when it is in your power to do it.” Second, never use more than 30% of your available credit in any account. If you do those two things and in time, you’ll have a very healthy credit score that’ll get you a favorable interest rate if you apply for a loan.
Most major scoring companies, including FICO and VantageScore, put the heaviest emphasis on timely payments when determining your score. A single, 30-day-late payment probably won’t do much lasting damage to your score, but you might get hit with a late fee. Consistent late payments of 30 days will drag your score down significantly.
There are things you can do to make sure you pay on time. Get on a budget. This ensures you’ll always have enough to pay your bills. Then set up automatic payments from your checking account. Most banks now enable you to do that. If you prefer to pay manually, you can set up payment reminders. Setting a reminder a few days before a due date allows time to transfer money to the creditor.
Never have a balance on a credit card. Instead, pay off the entire balance in full each month to avoid paying interest. The lower your balance on each card, the higher your credit score will be.
If you find yourself in a tough spot financially and you have to temporarily run a balance on a credit card, many issuers now allow you to set alerts. This way, you’re notified when approaching the 30% mark.
Another trick when carrying a balance is to make several smaller payments during the month instead of making the full “payment due” amount at the end of the billing cycle. This will lower your credit usage ratio and probably reduce the amount you’ll owe in interest, too.
The longer an account is open, the more it improves your score. So, if you have two credit cards and want to cancel one of them, cancel the newest card to have the least impact on your score.
Finally, avoid taking on any new credit accounts as that will negatively affect your score, at least temporarily.
On this program we also answer your questions:
I’m eligible to retire soon and my options are to accept a lower annual pension along with a lump sum or take a higher annual pension with no lump sum. Which should I do?
I’m now able to save between three- and four-thousand dollars monthly. Where’s the best place to put this money?
My husband’s a pastor who receives a parsonage allowance. Should we pay off our mortgage as we just recently inherited some money? However, as a consequence, we’d lose the parsonage allowance. We still owe about $50k on the mortgage.
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