Rebuilding Credit

WHAT EXACTLY IS A CREDIT SCORE…?

Let’s start with the basics here and take some time to discuss what a credit score really is and does. When you google the definition of ‘credit score’ you will get a description similar to the following: “a number assigned to a person that indicates to lenders their capacity to repay a loan.” This explanation is pretty good when it comes to telling you what credit scores are used for. As the definition suggests, it’s a key number that lenders use when making a decision on whether or not they are going to give you a loan. So what’s a good credit score and a bad one? The following is a general rule of thumb for the numbers of good to bad credit scores:

• Excellent: 800 to 850
• Very Good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 300 to 579

Credit scores over 800 are considered superb, and scores below 500 are considered rather poor. Several factors go into calculating your credit score, which can positively or negatively affect them. Our goal today is to cover some of those factors and to come up with a plan to get our credit scores above 800, and make sure they stay there!

CREDIT CARDS… GOOD OR BAD?

When it comes to credit cards, they can be fantastically helpful or dreadfully harmful. By this, I mean that credit cards can either really help your credit score, but they can also really harm it. If you pay off your credit card every month, on time, then having a credit card can really help improve your credit score! Credit cards also many offer features and benefits that you couldn’t get with a debit card, like cashback and reward points. So if you are looking for easy ways to slowly bump up your credit score, getting a credit card and being diligent about paying it off in full every month is definitely a tip I would recommend that would help raise your credit score.

In contrast to this helpful way of increasing your credit score, if you do the opposite of what I just mentioned, you can really hurt your credit score. The opposite of paying off your card in full every month would be missing or skipping payments or paying late for a few months. Credit card companies monitor everything, and a few days late on a payment, or a payment missed in full, can hurt your credit score. So a credit card is a tool that you can utilize to really help you, but if used improperly, it could potentially harm your credit score.

IMPROVING YOUR CREDIT WITHOUT MUCH EFFORT

We all have bills to pay. Phone, healthcare, insurance, housing, the list goes on and on and on! This is a part of life and something we have to do. Paying your bills on time or late can really affect your credit score. So the first really easy way to have your credit score slowly begin to improve is to make sure that you pay all of your bills on time. If you have a hard time keeping track of all the payments you have to make, set up automatic payments, or check out our Guaranty Bank & Trust bill pay. All you have to do is set up the payments, and then when they are due, the bills are paid through the account you set up. So easy!

Your credit score, much like your birthdate, is a number that stays with you forever. So I hope you found a few of these suggestions helpful and inspiring to try. If you’d like more information or want to speak to someone about your credit and how you can improve based on your unique situation, our team of professionals at Guaranty Bank & Trust is ready to help you! It’s never too late to start improving and get your credit score in a good spot!!