There’s people every day who struggle with lowering interest rates on loans and credit cards, finding financial benefits, and bolstering their chances of renting an apartment or getting a job. The key to finding the answers to a lot of these concerns is having a strong credit score. At Allegius Credit Union, customers members are presented with an opportunity to have both financial freedom and responsibility.
The goal of Allegius Credit Union is to be a financial service provider that creates a product that ensures long-term financial security for their members through a commitment to excellence financial education .
“Our mission is to provide our membership with quality service and competitive financial choices to help ensure their long-term financial health,” said John Figueroa, Member Development and Marketing Manager at Allegius Credit Union. “We want to be our members’ financial service provider of choice, and we want our members to be set up for success on their individual financial health journeys.”
When it comes to a credit score, there are five components to keep in mind: payment history, utilization percentage (revolving debt balances to limits), length of credit, new credit (the number of credit inquiries in the past 24 months and accumulation of new debt), and type of credit. Out of these five components, the payment history and utilization percentage will be are the two factors that impact your credit the most.
Miranda Wilkening, Director of Credit Services at Allegius Credit Union, is providing has its customers with five tips that people can count on to boost their credit score. Here are the five tips to have for your credit score that can generate the most financial success. Here are ways you can start improving your score.
Prioritize making your payments on time each month
It’s easier said than done when it comes to making payments on time. Many people set up an automatic payment feature. You can also check your bank’s online bill payment services to schedule these payments in advance. Creating a spreadsheet or a checklist of bills to organize and track your payments is a good financial practice.
Try not to use more than 50% of your available credit limit on credit cards or revolving loan types
Monitoring your credit limit is important because it can directly impact your credit score and financial flexibility. A low credit utilization ratio, which is the amount of credit you're using compared to your total credit limit, is good for your score, while a high utilization can create a negative impact. Revolving loan types include Home Equity Lines of Credit, Unsecured Line of Credit loans, and credit cards . If you are using a 50% rate or more of your available credit limit, this can negatively impact your credit score and potentially lead to other financial consequences.
Make more than minimum payments on your credit cards each month
While it’s not always feasible to make more than the minimum payments, it’s best to aim for this practice if possible. Paying your balance in full each month is even better. Similar to organizing and tracking your payments, this practice can also help you save money on interest and lead to more substantial savings over time.
Leave accounts, also known as tradelines, open for a minimum of 24 months
Opening and closing accounts too quickly can have a negative impact on your overall length of credit. When you open and close your accounts too quickly, this can put a damper on your overall length of credit . As a result, your credit score will continuously be pulled go down. A longer credit history can generally indicate more experience in managing credit responsibly. If you close an account, especially one with a high credit limit, it reduces your total available credit and can increase your credit utilization ratio, which will negatively impact your credit score.
Establish a relationship with a credit union
By working with a credit union, you can take advantage of lower interest rates and easier loan approval processes. This will help keep inquiries low on a credit report, put money back into your pocket with lower interest charges, and develop a lifelong loan partner that you can always trust.
Bonus tip: A 1% of credit utilization translates close to 1 point on your credit score
For example, let’s say you have a $10,000 limit and a $5,000 balance on a credit card. With a utilization percentage of 50%, that’s like having 50 points taken from your credit score. If you were to pay $2,000 towards your outstanding balance, resulting in a new balance of $3,000, your utilization percentage would come down to 30%. By taking 20% away from the initial utilization percentage, this would increase your credit score by approximately 20 points.
On top of these tips to boost your credit score, it’s also important to keep an eye on the latest trends.
“The most popular trend continues to be credit apps that people utilize to monitor their credit,” Figueroa Wilkening said. “We are advocates for using tools like this as a means of identity protection. It's very important for people to monitor their credit reports to ensure fraudulent credit accounts aren't being opened under their identities. The average person doesn't know that most of these apps use a Vantage score, which is not the same as a FICO score. More often than not, the Vantage score is higher than a FICO score. This can cause frustration for prospective borrowers, because they go into applying for credit with an inflated sense of their credit score.”
According to Figueroa Wilkening, most financial institutions utilize FICO, especially credit unions. FICO’s reputation for providing a conservative overview of a borrower’s credit aligns closely with many of the risk-based lending methods in the credit union industry. Allegius Credit Union is motivated to create a banking experience that is simple and successful for everyone they work with.
“The biggest thing we try to do is to make banking with us easy,” Figueroa said. “We are proudly local. This means we learn about you and your goals and are there as a partner when you need us.”
For more information on Allegius Credit Union, you can visit allegius.org.
