Washington County Weekend Post

GMTODAY.COM SUNDAY, SEPTEMBER 5, 2021 • WASHINGTON COUNTY POST • 3 The road to great credit begins with consumers. Con- sumers who demonstrate an ability to pay bills on time and stay out of debt can make themselves more attractive to prospective creditors, which can ulti- mately save them thousands of dollars when they pur- chase homes and/or vehi- cles. While strong credit scores take years to build, men and women looking to improve their scores can begin doing so rather quick- ly. Scores will not skyrocket overnight, but they will begin to improve if con- sumers begin taking the fol- lowing steps. • Pay bills on time. Pay- ing bills on time is one of the most effective and simplest ways for consumers to improve their credit scores. One of the credit scores lenders use to determine if they will extend credit to a given applicant is the FICO ® score, which is generated by the Fair Isaac Corporation. According to the Fair Isaac Corp., a FICO score is broken down into five categories, some of which factor more heavily than others. An indi- vidual's payment history accounts for 35 percent of his or her FICO score, mak- ing it the most influential of the five factors for people who have been using credit for a long time. (Note: People with a nonexistent or greatly limited credit history may have their FICO scores more influenced by other factors.) If necessary, set up automat- ic payments so all bills, but especially bills owed to cred- itors, such as credit card companies and student loan lenders, are paid on time. • Pay down balances and keep them low. Paying bills on time might not be enough to dramatically improve credit scores if con- sumers are still only paying the minimum amount each month while maintaining high balances. After pay- ment history, amounts owed is the second biggest influ- ence of most consumers' FICO scores, accounting for 30 percent of an individual's score. So in addition to pay- ing on time, consumers should try to pay more than the minimum amount due each month, ideally paying balances in full each month. • Study your credit report. Credit scores can sometimes fall victim to errors on a person's credit report. A 2012 Federal Trade Commission Study found that roughly 25 percent of all consumers had errors on their credit reports that adversely affected their cred- it scores. Consumers who suspect their credit score does not reflect their credit worthiness should examine their reports, which are available to all consumers once a year for free, for mis- takes. Report any mistakes to Equifax, Experian and/or TransUnion. • Wait to apply for new lines of credit or mort- gages. Consumers' credit scores take a small hit each time they apply for new lines of credit, whether it's a cred- it card or mortgage. Con- sumers who want to quickly improve their scores should refrain from applying for new lines of credit until they have increased their scores to a point where they won't mind seeing those scores take a small dip. Consumers' credit scores can affect their lives in vari- ous ways. While it takes time to build strong credit histo- ries, consumers can take small steps to begin improv- ing their credit scores right away. Simple ways to quickly boost credit scores

• Cover