by Hayley T.
Steps to Keep your Credit Score Stable!
Many people our age have not yet opened up a credit account, but it is something that many of us see in our future. Although this might seem scary, as your credit score holds a lot of power, it can be quite manageable if you follow some key steps.
Credit Scores
Before I tell you about some of the steps needed, it is super important that the basis of credit scores is understood. A credit score is a numerical representation of how trustworthy someone is with their money, and oftentimes people will be judged by their credit scores when they apply for loans, mortgages, etc. as credit unions want to make sure that they get their money back. Credit scores go from 300 to 850, and as you can see in Fig. 1, (DeNicola), there are already many people with poor credit scores, so it is important to make sure that you are part of a good bracket. You may wonder why it even matters to have a good credit score, well having a good credit score will help qualify you for the best interest rates, this will lead to you paying lower finance charges on credit card balances and loans (Irby). The less that you are in charge of paying in interest, the faster you are going to be able to pay off the loans that the credit union gives you!
Figure 2 (Irby)
Step 1- Make Sure to Pay Bills on Time
One of the largest factors that contribute to someone having a good credit score is having a good payment history. Your payment history, ability to pay bills on time, make up 35% of your credit score. In comparison to the other 4 main factors, this is an astonishing amount greater, as those range from 10% to 30% (White).
Now that you understand how important payment history is, how do you make sure you never miss a payment? Utilize autopay, calendars, notifications to the best of your ability to remind you when bills are due. When you set these alarms and fill out your autopay, make sure that you set it up to give your payment enough time to process, the earlier the better. Doing this you will be guaranteed to have every payment in on time, as this will affect your credit score as well.
The hope is that by doing these things you will be able to maintain a good timeline which will improve your chances of keeping a good credit score!
Step 2- Start Early!
Not that you should rush to getting your first credit card but starting earlier can oftentimes be beneficial. Having a credit card for longer can often give you more time to accumulate a good credit score. Although having a credit card may be scary, the length of your credit history makes up about 15% of your credit score (DeNicola). Even though it is a large portion of your credit score, it is important that you maintain good standings by following the other steps.
Figure 3 (Resendiz)
Step 3- Spend Within your Means
It may seem really appealing to upgrade your phone, buy a new car, etc. but those things could actually end up hurting your credit more than helping. This has multiple aspects come into play, but an important thing to remind yourself is that credit scores will take into account your credit card balance vs. your credit limit, or your credit utilization (Irby). If you spend too much relative to your credit limit then it will appear as though you are spending more money than you actually have, while spending too little won’t give a credit union an opportunity to see you being responsible enough to handle a larger loan payment. If you have questions about this it is super important to talk to your credit union, as they will consider a good number.
This is a really important thing that people our age should be wary of, as the price of college, cars, and mortgages have gone up significantly within the last decade. Now people are having more trouble handling the debt that they will be put in because of this, the maintenance of a budget, and paying on time to get a better credit score regardless.
There are many more factors that you will need to be cautious of as you enter the world of credit cards but I hope that this will give you a good foundational understanding of the scary concept that credit card management is. If you have questions when you start a credit account, the most important thing that you can do is talk to the credit union that you will be working with. They are the ones who specify their rules and regulations, so they can provide you with any further needed information, but do not be afraid to ask because it will only hurt your credit score.
Bibliography
DeNicola, Louis. “What is a Good Credit Score?” Experian, 11 February 2021, https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score/. Accessed 22 March 2021.
Irby, Latoya. “8 Steps to Avoid Bad Credit.” The Balance, 9 September 2019, https://www.thebalance.com/steps-to-avoid-bad-credit-960095. Accessed 22 March 2021.
Irby, Latoya. “How a Credit Score Influences Your Interest Rate.” The Balance, 21 October 2020, https://www.thebalance.com/how-your-credit-score-influences-your-interest-rate-960278. Accessed 22 March 2021.
Irby, Latoya. “9 Benefits of Having a Good Credit Score.” The Balance, 12 May 2020, https://www.thebalance.com/having-good-credit-score-960528. Accessed March 22 2021.
Lexington Law. “2020 Average Credit Card Debt Statistics in the U.S.” Lexington Law, 4 January 2020, https://www.lexingtonlaw.com/blog/credit-cards/average-credit-card-debt-statistics.html. Accessed 22 March 2021.
Resendiz, Joe. “What's A Good Credit Score To Have? How To Get It?” Value Penguin, 10 Novemeber 2020, https://www.valuepenguin.com/whats-a-good-credit-score. Accessed 22 March 2021.
White, Alexandria. “Want a good credit score? This is the most important factor.” CNBC, 30 August 2020, https://www.cnbc.com/select/this-is-the-most-important-factor-that-determines-your-credit-score/. Accessed 22 March 2021.
Enjoyed reading the blog and liked the vocab and the word choice you used.
ReplyDeleteI love how you organized your blog into sections, and since I really had no past knowledge of this topic, it was really easy to follow and understand. I personally do not have a credit card yet, but I know how important it is to get one when you are 18 to start building up your credit. Your steps were very useful and definitely show what to do and what not to do to avoid credit card problems that can potentially affect your credit score.
ReplyDeleteThis is a really informational blog post, something that will definitely help me figure out some things about credit cards that I didn't know about. paying bills for your card on time will definitely prevent you from having card problems and help bring your credit score up. I wasn't really thinking about starting too early but knowing that it can be beneficial changed my mind. I agree with spending within your means. Many people see things they want that are really expensive and want to get it. But what they should be buying is buying the little things that can help your credit score.
ReplyDeleteThis post was very informational and gave lots of knowledge and steps on how you can raise your credit score. Your credit score is one of the most important parts of your life, because it allows you to be able to do so much, like buying a car, down payment on a house and also taking out loans. I think that sometimes people don't understand how much this can impact your life and how it can really affect your life. I do agree that you should be getting a credit card very shortly after you ruten 18 because it can help build your credit score fast and easily. What are ways that can build your credit score when you first start out? I know that paying your bills is important but what are some other ways people can build credit fast and easy. I learned a lot about how your credit score can impact your life and how it is important to have a strong credit score so that you are able to do much more with your credit later in your life.
ReplyDeleteBefore reading this I never really understood what a credit score was. Of course I have heard of it but besides that and that paying bills on time effects it I had no clue what it was and why it is important so I found this blog very useful. Would you still recommend a credit card to people who have a hard time saving their money or just blow through it right away? because I feel like they will just get in debit. Also how hard is it to get your score up if it is already low?
ReplyDeleteVery insightful and helps a lot of us for the long run. I've always seen those commercials like credit karma talking about a good credit score and not really knowing even if my parent or other have a good credit score. Not to mention credit score can effect loan usage for when we go to college. One little question I'd like to ask is does this apply to banks or other financial establishments? Because you talk about if you have question for a good credit score and setting up a credit card at a credit union. Learned a lot from your post.
ReplyDeleteSoon so many of us will be approached by so many different credit card companies begging us to use their card, and it’s easy to fall into the trap of overwhelming ourselves with more credit cards than we can handle, overspending, or not paying bills on time. However, with your blog, you make it simple and easy to get your credit card and build your credit score. I love how much great information you had from credible sources as well, all eight of your sources helped you craft and great well-informed blog post. Overall great job! You taught me a lot.
ReplyDeleteThis blog was very informative and actually gave me a better insight on how I can boost my credit score. Raising your credit score can be so beneficial for you future as it will make things so much easier for you.It's really important to have a good credit score, especially in times like these. Paying your bills on time is one of the most important things for building your credit score and liked how you kept touching base on that which was really effective. Credit score allows things like buying a car, taking out loans, and down payments to become easier and manageable. The best time to start out in my opinion is when you are 18, if you can get your hands on a credit card even earlier do it, but 18 is probably the best place to start. This blog was fantastic and full of important information to really helps to understand how credit scores work, and it's benefits. Great Blog!
ReplyDeleteit is really helpful that you put some ways a credit score was determined, because before this i didn't know how a credit score changed.
ReplyDeleteThis article was able to help me better understand how credit works. I recently just got a credit card and although I had a pretty basic understanding on how it works, I think your blog helped me out significantly.
ReplyDeleteI think that this was a very good topic to write about. I think us as teens are very aware of debit cards since that is all we are allowed to use until we are 18. I personally didn't know much about credit cards prior to reading your blog post, however now I am much more aware of how to use credit cards and how they can benefit me.
ReplyDeletethis article gives me a better understanding of what credit cards are and how to use them in a way that will help out my credit score rather then hurt it. I didn't know that getting a credit card early can actually work to my advantage, with being an irresponsible 18 I would figure that one should wait until they are more responsible with there money before they go and open up a credit card. I like how you touched on the things that having a credit card will help you do like getting a loan, buying a car and even putting a down payment on a house. The only thing your blog left me wondering was if your credit score is low how to get it back to a good place.
ReplyDeleteyour post helped me understand how credit works. i didnt know how it work or changed becore but now i do and it makes sense. thankd
ReplyDeleteThis is great, I wish I had knew this information before turning 18 so I could have understood what is needed to maintain a proper credit card.
ReplyDeleteI had no idea that a better credit score means that you could get better interest rates. I’ve always heard that its important to have a good credit score, but never knew why. In addition, I’m glad that now I know how to keep a good credit score so that I don’t accidentally damage it and have to pay the price. One question I would have is how was this system developed? In addition, do different banks have different credit score systems or is there a universal credit score system?
ReplyDeleteHayley, thank you so much for writing this! All of my questions have been answered! I really loved how you included the chart as well, it was so helpful to look at the numbers broken down. As most of us prepare to move into the "real world," I can confidently say that we're stressed and anxious. Things like credit scores and credit cards are scary and misunderstood. Thank you for breaking down how to get a good score into easier steps. Nice work!
ReplyDeleteI found this really interesting on how credit scores are so important. I never would have thought that they mattered this much. I didn't know that they can control your loans, mortgages and other things I hope I will be able to stay apart of at least the good section of the credit score using your steps.
ReplyDeleteThis post provided so much information that I didn't know before. This blog post is great for younger viewers who are just getting into the credit card/score system and I think the points that you provided were great to understand where to start, and the benefits of having good credit score. Being able to make sufficient loans and mortgages will be possible with good credit score, so thank you for helping me better understand!
ReplyDeleteThis post is incredibly interesting and informative, especially as we are either going to be eligible for a credit card soon or we are now. You did an amazing job highlighting the importance of a good credit score and even mentioned how you can accomplish this and implemented the importance of starting at the point we are at. What cards do you think help build credit the best and are easiest to manage?
ReplyDeleteThis blog post was very informative and gave me so much more insight on what a credit score can do for you. I learned so much information that I didn’t know before reading this. I didn’t realize it until recently that a lot of your big expenses really rely on how good your credit score is; buying a car, the down payment for a house, what loans you can take out and applications for other credit cards. One thing I wonder is what is a solid age for people to get credit cards? Would people still recommend getting one even for those that have trouble with spending? How can they build a good credit score in the beginning? Overall, this blog post was awesome and I learned a lot from it, great job Hayley!
ReplyDeleteThis post was extremely informative and useful. As I approach 18, the thought of using a credit card can be super daunting. I really liked how you explained what a credit score was in detail. This was very helpful in the ways of giving me a better understanding of how credit scores work and what I can do to make sure I don't have a low credit score. I learned a lot from this post!
ReplyDeleteYou did a great job explaining a very impactful topic. Having credit card debt can be one of the most dangerous situations to be in (depending on the interest rate). Having even a minimal education can help someone from being in a very detrimental situation.
ReplyDeleteI liked that you explained the steps in detail and gave a lot of background information. I also liked that you explained some of the common risks of credit card debt, and methods of avoiding each individually. I also liked that you didn't show the options as better or worse than one another, and let the reader make their own choice on what method they wanted to use.
ReplyDeleteThis post was very informative considering most of us are eligible or about to be eligible for a credit card. You did a good job explaining that credit score can be good and bad. A credit card is much different from a debit card and you made that clear.
ReplyDeleteYour blog post was super good, and is information that I will definitely be using in the future! I liked that you explained all of the topics discussed really well and also good background information. Your visuals also went really well with what you were talking about and made the piece a lot more engaging. Great job!
ReplyDeleteUpon my 18th birthday the first thing I did was apply for a credit card of my own. I'd heard about credit scores, however, had no clue of how impactful they were in ones future and how a poor score may set limitations on ones financial abilities. Thank you so much for an almost instructive step by step approach on how I can keep my credit score high!
ReplyDeleteI love the topic choice as this is extremely relevant to people our age, as I feel like most of us know the basics about credit scores, but don’t know enough about how to maintain a high credit score, despite its importance. Step 3 especially was very insightful and surprising to me, as I didn’t know that spending within your means will help your credit score, and your credit union could see you as not as responsible for making big purchases you can’t quite afford, and you can get a lower score as a result. This is super interesting to read about, as I’ve never heard that before but I feel like it’s something all young people should be taught.
ReplyDelete