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3 Ways to Raise Your Credit Score for Financial Freedom

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We all know credit scores are an important indicator of overall financial wellbeing. But did you know your credit score can affect everything from your job applications to buying a house? 

Your credit score is made up of a complicated equation that takes into account five major components of your credit usage: 

  • Your payment history
  • Amounts owed on your credit accounts 
  • The mix of different types of credit (loans, credit cards, etc.) 
  • The length of your credit history and 
  • The amount of new credit you have

 

So, if you find yourself held back from taking important steps in your life, there are some simple steps you can take to make these five components work in your favor. Here are three ways you can raise your credit score and start living the life you’ve always wanted. 

 

Know Your Credit Score Inside and Out

The first step in addressing and raising your credit score is to know what’s contributing to it. 

With multiple data breaches occurring over the past few years at some of the bigger credit reporting companies, it’s important for you to check up on your credit report routinely. One government report found that about 26 percent of people have some type of error on their credit report that could be affecting their credit scores. 

Every year, you can obtain a free report from the big three credit reporting companies: Experian, Equifax, and TransUnion. Check through these reports and make sure to flag and address any discrepancies. 

 

Understand Your Credit Utilization Rate, and Use It to Your Advantage 

One of the major contributors to your credit score is your credit utilization rate. This equation measures how much of your available credit you typically use. So, for example, if you have a credit card with a $10,000 credit limit and you currently have a $5,000 balance due, your credit utilization rate would be 50 percent. 

Thirty percent tends to be the ideal utilization rate, but if you have a low credit limit, or use your credit card a lot, one tactic to help you stay at or below the 30 percent rate would be to make multiple payments on your credit card a month.  

 

Take Advantage of Different Credit Card Options

Depending on if your goal is to build back bad credit or start earning credit for the first time, there are a few different credit card options that could help improve your score. 

Option 1: Becoming an authorized user on another user’s account can help you build credit without having to qualify for an account on your own. This can be a good option if the user you work with has a long-standing account with great payment history. 

Option 2: Opening up a secured credit account (or a DEXSTA Shared Secure loan) can also help you build back bad credit over time. 

Banking specialists, like the wonderful team at DEXSTA Federal Credit Union, can help you identify the right account for your particular credit situation.

 

Get the Tools to Raise Your Credit Score with DEXSTA

Overall, you can utilize several different options to help build up your credit. But, remember, it can take a few months to raise your credit score. But with a little patience and assistance from a DEXSTA banking specialist, you can take the next big step in your life.

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