5 Steps to Increase Your Credit Score

A low credit score isn't the end. However, a low credit score can end up costing you thousands of dollars with much higher interest rates on loans. It may even prevent you from making some of the larger purchases that you and your family need, such as a new car, a home, or equipment for a small business. Just know, it's fixable!

Here are some simple steps to start increasing your score today.

1. Review Your Credit Report - You can get a free copy of your credit report from all three credit reporting agencies once each year by visiting www.annualcreditreport.com. Reviewing your report can help you correct errors, which could lower your score, and even prevent fraud.
2. Pay on Time - Making regular, on-time payments is a big part of your credit score. When you pay on time every time, you will see the benefits of a higher score that will open new doors to more affordable financial solutions. This will also prevent late fees and penalty interest rates from kicking in, making it harder to catch up on existing bills.
3. Talk to Your Financial Institution - If you can't pay on time, contact your financial institution right away to discuss your options. Skip-a-payment promotions, which let you pay a small fee for deferring a single monthly payment, may be helpful if the situation is temporary or a refinance or consolidation loan may assist with longer-term cash flow issues. Just be sure to reach out sooner vs. later, ideally before you miss a payment.
4. Understand Your Utilization Percentage - One of the biggest factors that contributes to your credit score is utilization. This is the amount that you owe compared to your credit limits - once you exceed around 20% (i.e.  you owe $2,000 on a credit card with a $10,000 limit), it can begin to negatively impact your credit scores. Making more than the minimum required payments can really help bring this back in line and boost your score.
5. Avoid Excessive Interest Rates & Too Much Debt - Beware of store-front lenders that offer fast or easy cash and be sure to read the fine print before you decide. It's worth the extra time to call your local, community financial institution to learn about the personal loans or lines of credit they may offer before taking out a quick loan only to find out that the interest rate and payment terms are excessive. Consumers oftern find themselves more cash strapped than ever when short-term loans come due, creating a vicious cycle of repeat borrowing. A trusted financial partner can often help you avoid these situations and keep your payments reasonable.

The sooner you start working to improve your credit score, the better!