As you enter and navigate the world of adulthood, there’s a lot to learn about and keep track of when it comes to your finances. One of the most important things is how to manage your credit. Your credit score is a key factor in your financial health, and can affect your ability to get a loan, rent an apartment, or purchase a car.
But how is your credit score established, and how do you keep that score healthy?
Your credit score is determined by several factors, such as:
- your payment history – 35%
- how much credit you have – 30%
- the length of your credit history – 15%
- how often you apply for new credit – 10%, and
- the types of credit accounts you have – 10%.
To maintain a good credit score, it’s important to
- make timely payments,
- keep your credit utilization low, and
- avoid applying for too much credit too often.
Another important step you can take to protect your credit score is to freeze your credit. A credit freeze prevents new creditors from accessing your credit report, which can help protect you from identity theft. To freeze your credit, you must contact each of the three major credit bureaus: Experian, Equifax, and TransUnion. Each credit bureau will provide instructions on how to freeze your credit. It is important to note that once you freeze your credit, you will have to unfreeze any time you want to apply for a loan or increase a line of credit.
Our recent blog, “Understanding & Managing Your Credit Score: How to Survive and Thrive the Credit Score Jungle” provides more detailed tips on building and managing your credit score.
It’s time to give yourself some (good) credit!
Take Action Now!
- If you don’t already have one, apply for a credit card today! Use it responsibly and always pay off your balance on time. And never close the first credit card you ever opened.
- Download a free credit reporting app to help monitor your credit score, like Credit Sesame, Credit Karma or FreeCreditReport.com.
- Set up autopay for your credit cards to avoid late payments.
- Pay down credit card balances.
- Freeze your credit at all three credit agencies.
- For more insight, read out blog, “Understanding & Managing Your Credit Score: How to Survive and Thrive the Credit Score Jungle“