UFCU Sponsored Content: Six Steps to Shaping Your Credit Score


UFCU-SPONSORED CONTENT – In 2020, the average Texans credit score was 688, which translates to a “good” FICO® score. Whatever your number, read on to learn six simple steps you can take to increase your score.

1. Knowledge is power

The first step in your plan is to find your number. All three major credit bureaus (TransUnion, Experian, Equifax) offer credit reports, but you may have to pay to see your score. Some credit card companies offer a free annual credit report that includes your score, so ask your institution if this is something you can get.

Once you have your score, understand what it means. The FICO® Score range translates into these values:

  • Less than 580 = Poor
  • 580–669 = Fair
  • 670–739 = Good
  • 740–799 = Very Good
  • 800–850 = Outstanding

2. Keep an eye on your balance

A best practice for credit cards is to pay your outstanding balance in full at the end of your billing cycle to avoid interest. Only make purchases with your credit card that you can afford to pay for immediately. When this is not possible, limit your balance to less than 30% of the total available credit. The closer you get to paying off the balance — and having more unused credit — the better your score will improve.

PlanU Tip: You have a 25-day grace period from the time you make a purchase until you are charged interest. Always try to pay off your balance within this 25-day grace period.

3. Pay off your debt

If you continue to use the card, pay any new charges within the 25-day grace period. Resist to add to the overall balance. Next, determine how you can repay the outstanding amount. One idea is to transfer the full balance to a card with a lower interest rate – some cards even have 0% rates for a set number of months. Read the fine print ahead of time to understand transfer policies and any fees. Make a plan to bring your balance to less than 30% of your available credit and then to $0.

4. Always pay on time

Always pay your bills on time. Late payment even a day hurts your score. This is the single most important thing you can do to improve and maintain your score.

5. The older the better

One of the factors that affect your credit score is the length of your credit. The older your credit history, the better your score. Keep your oldest accounts open even if you no longer use that card and have a $0 balance. As long as you don’t pay an annual fee, it doesn’t hurt to keep these cards open. You will be doing your credit score a favor.

6. Variety is key

It’s a good idea to diversify your types of debt. Rather than putting car payment, college tuition, and home improvements on a credit card, consider applying for purpose-specific loans. For example, it can be a car loan, a student loan and a line of credit. Various loans show lenders that you can take responsibility for paying off different types of debt. But don’t open them all at once – your credit score can be lowered if you open or apply for several new loans in a short period of time.

If you’re looking for additional financial tips and tools to better plan, spend, save, and borrow, check out PlanU by UFCU. You’ll find options that range from talking with a financial health expert to creating a personalized resource center to meet your needs.


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