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7 Ways to Protect Your Credit Score

two people looking at a credit score app

Your credit score is a three-digit number that creditors use to assess how likely you are to repay your loans. A high score can help you qualify for the lowest interest rates and gives you the ability to borrow money for purchases.  

Here are seven things you can do to make sure your credit score stays healthy:  

  1. Pay back your debts on time. Your ability to avoid having late or missed payments is the most important factor (35%) in calculating your credit score. Lenders view these habits as a risk and are therefore reflected in a lower credit score.
  1. Apply for new credit only when you need it. Ten percent of your credit score is determined by how many new credit accounts you’ve opened and the number of times lenders have checked your credit. Another 15% of your score is determined by the length of your credit history. When you add a new account into the mix, the average age of your credit accounts drops. 
  1. Consider keeping your first credit card open. We all remember our first credit card, and eventually there comes a time when the spending limit on it is so low that we use it sparingly and have moved onto bigger and better cards. Even though you’ve stopped using your first credit card, it’s a good idea to keep it open. This will help the 15% of your score that comes from the length of your credit history. It also will help the even bigger part (30%) of your score that’s based on your utilization ratio: your credit card debt relative to your total available credit.
  1. Know who you’re co-signing for. Be cautious about co-signing a loan, even for family members, unless you are willing and able to take on the payments later, if necessary. If a payment is missed it can negatively affect your credit score. 
  1. Guard your personal information. Be very careful when giving out your Social Security number, birth date, credit card numbers, and other personal information. Use secure websites and be cautious on phone calls. Don’t leave paperwork with this information on it lying around—shred it. 
  1. Regularly monitor all your accounts. Even if you don’t use them, check each account to make sure there aren’t charges, such as annual fees, and that no one is fraudulently using your card. Order a free credit report from annualcreditreport.com, the only site sanctioned by the Federal Trade Commission. Stagger your reports from the three reporting agencies so that you get one report every four months. 
  1. Stay diligent. Make sure that the good credit score you’ve worked so hard to build stays that way. 

Protecting your credit score is essential for maintaining your financial health and unlocking future opportunities. By regularly checking your credit report, making timely payments, keeping your credit utilization low, and avoiding unnecessary hard inquiries, you can build a solid credit foundation. Remember, a strong credit score not only helps you secure better loan terms but also enhances your financial stability. Stay proactive and informed to safeguard your credit and ensure you’re in the best position to achieve your financial goals. 

Disclosures

Source: https://www.cuna.org/