How can I improve my credit score?
Valerie RumboughYour credit score is very important. Scores range from 300-850, with higher scores (760 or better) being the best. Higher scores mean lower interest rates on car or house loans.
To keep your score high, or to improve your score, there are a few simple steps you can take. Keep your outstanding credit card balance as a percentage of your total credit limit on all cards to 30 percent or less. If you have paid off credit cards, keep the account open, since it adds to your overall credit limit and can keep your balance percentage down.
If you are working on paying off debt, be sure you pay at least the minimum balance owed on time each month. If you happen to be late, consider paying off that card as soon as possible. There is a better chance of the late payment not affecting your score if the card has a zero balance.
If you don’t have a credit card, consider opening up one or two accounts. Lenders like to see a borrower who can manage several types of debt responsibly. However, don’t open up too many cards at once. New cards tend to pull your score down a few points, while older cards (at least two years) actually help your score.
Check your credit score periodically for errors. That way, when you apply for a car or house loan, you won’t be surprised when you meet with a lender. One Web site that offers this information is myFICO.com.
Most importantly, remember that your score is a reflection of your character and witness for our Lord. If you have been a poor steward of the money God has entrusted you with, your witness will be poor as well.
Editor’s note: Rumbough, CPA, CFP, is vice president of finance with the Baptist Foundation of South Carolina. For more information, call 800-723-7242.