It’s not uncommon to feel nervous or even a little apprehensive when applying for credit. Most of us agree that it’s not an easy topic to talk about, but did you know that 37% of us have a credit score of 700 or lower? That’s over one-third of consumers! If you happen to fall into that category, your WWFCU (Wayne Westland Federal Credit Union) financial gurus want you to know that you are not alone and that we’re here to help!

Here are 5 tips for improving your credit:

1.) On-Time Payments. Perhaps the best way to improve your credit is by making your payments on time. Not only does it show current and potential lenders your ability to pay back debts within the agreed terms, but it is also the largest scoring factor on the FICO and Vantage Score credit scoring systems, accounting for roughly 35% of your scores makeup.

A helpful hint to keep you on schedule and move you towards an improved credit score is to set up automatic payments. This is a great tool for someone who is always on the go. If automatic payments don’t fit your lifestyle, calendar reminders are another way to stay on top of your payment schedule and avoid late payments.

Sometimes it’s difficult to make a large payment and that’s ok, try splitting up your payments. For example, if you get paid on a weekly or bi-weekly basis, make small payments towards the balance every payday. Making more than your minimum payment is also a great idea, as that will help get the balance paid down faster and save you on interest charges over the long run.

2.) Credit Capacity. This is the second biggest factor in determining your credit score. Your credit capacity is based on the total amount of credit that has been granted to you versus the current balance of credit owed. For example, if you have a credit card with a $10,000 limit with an outstanding balance of $9,000, you are using 90% of your credit capacity.

The best rule of thumb is, never spend more than 30% of your available credit limits. If you can do this, it will improve your credit score and help your chances of securing a lower interest rate on future credit. One possible solution to remedy a high credit capacity is to try requesting a credit limit increase. By having a higher credit limit while keeping a low balance, this will show your ability to use credit wisely. Another option when trying to keep your overall credit usage low is paying down balances before the end of the billing cycle.

3.) Credit Mix. Another factor that makes up your credit score is the type of debt on your credit report. Having a good credit mix is beneficial to your overall score. An ideal credit mix includes a blend of revolving vs installment loans. For instance, having at least 1-2 credit cards or lines of credit, a secured loan such as an auto or mortgage, and an unsecured personal loan is highly beneficial.

Another way to add variety to your credit is by self-reporting any liabilities that aren’t already showing on your credit report. Reporting payments such as your phone, gas or electric bill can give you a boost to your credit score and show good payment history. Just use caution when you are trying to obtain new tradelines to add to your report, and don’t add too much at once or in a brief period. Adding too many new credit accounts to your report will have adverse effects.

4.) Dealing With Collection Accounts. Having an account in collections or a charge off status has a significantly negative impact on your credit score and can stay on a report for up to 7 years. However, there are solutions to overcome these derogatory tradelines and get your credit back on track. Most collection agencies are willing to set up payment arrangements or agree to settlements. Paying off collection accounts will help your credit and show potential lenders that you are responsible and trustworthy.

Not only does satisfying these debts help improve your credit, but it will prevent any further collection action due to those debts. Collection agencies may receive a judgment against you, which allows them to garnish your wages, bank account and potentially seize personal property. If you do find yourself in a situation like this, WWFCU’S financial counselors are here to help you.

5.) Checking Your Credit Report. Monitoring your credit report regularly to look for any missing or incorrect information is vital. Wayne Westland Federal Credit Union offers free credit reports to our members on the last Friday of every month. These reports are a soft inquiry and won’t affect your credit score or be listed as a credit inquiry.

This report is used as an educational tool and resource for checking in on your credit accounts. Feel free to stop in and see one of our Member Service Representatives who will supply your free report and answer any questions you may have. Our financial counselors are also always available to give sound credit advice and help you start or continue your credit journey.

Wayne Westland Federal Credit Union has many solutions available to help you improve your credit. If you are just beginning to build your credit, we have various loan products designed to help you. We offer low limit Visa credit cards, small balance personal loans and other options that can help you in building credit and a good payment history. Give us a call today to start your path to financial success!

Sincerely,

The Financial Gurus