In honor of National Financial Literacy Month, let’s kick off the month discussing credit and how you can work towards a great credit score!

Even if you don’t have a credit card, chances are you have been offered one at some point, either online, in the mail, or while shopping. Credit affects all of us and it is important to understand the impact that credit can have on your everyday life.

Credit is the concept of buying something now and paying for it later. Seems simple enough but what was once simply a service to prolong payments, credit has now become a measure of an individual’s financial stability.

An individual’s credit is analyzed and scored to determine if an individual is a potential risk to loan money to.  Credit reports can be used by employers, landlords, and banks to determine your overall stability and decide whether or not you qualify for housing, loans, and other products. Do you think it seems unfair that companies can judge you simply based off of your credit score?

Whatever your opinion on credit, it is something you need to pay attention to every day. There’s no need to be discouraged as you are personally responsible for your finances and have full control of keeping your credit in good standing.

Credit scores are usually measured on a scale from 300 to 850. Maintaining a score over 700 is usually considered good. How do you do this?

A good rule of thumb is to pay your bills not only on time, but as soon as possible. If you can’t pay in full each month, try to keep your balances as low as possible. Keeping your revolving balances below 30% of your utilization rate is ideal. If you are worried about remembering to pay on time, set up a monthly payment calendar or automatic payments.

Think about breaking up your credit card payments. If you put money towards your account twice a month, it will keep your balance running at a lower rate and in turn lower your utilization rate.

If you have multiple credit cards, consider paying off the smaller balance cards in full before tackling the larger balances. Your credit score can be negatively affected if you have too many balances across multiple accounts.

Try not to fall for all of the promotions and discounts you may earn by signing up for credit cards while shopping or online. While it great to establish credit, too many accounts, too fast may be tag you as “risky” and negatively affect your score.

Closing old accounts can sometimes negatively affect your credit as well. If there is no annual fee on a card, consider keeping it open to help establish a longer credit history.

Another great way to improve your credit is to start paying down your debts and loans. Starting to tackle your student, car, and home loans can help relieve some of the burden as well as work towards “good standing” and a great credit score!

Being in control of your finances is important for all aspects of your life. Credit doesn’t have to be a scary, you have the power to rock your credit score! It just takes a little bit of initiative and some positivity to give yourself the financial freedom you deserve. We know you can do it!