Published by: G. Kelly | 12/21/2018

6 Tips for Improving Your Credit Score

Want a better interest rate? Start with better credit.


Improving your credit is a marathon, not a sprint. Adopt these habits for better credit in the long run.

It's no secret your credit history matters on your mortgage application. Your credit not only factors into getting you approved, but in landing you the best interest rate, too. While your credit score is a snapshot of how you handle credit obligations, it takes more than a snap to improve it. So, whether you're applying for a mortgage, ready to refinance or thinking about the future, there's no time like right now to adopt healthy credit habits, like these:

1. Pay your bills on time

Making payments on all of your accounts on time is the simplest way to score good credit. Neglecting your responsibility is one of the fastest ways to make your score plummet.Not organized enough to keep up with due dates? No problem. Consider apps, like Mint, that help you organize your finances. They can put due dates on your personal calendar, schedule payments and will even send you reminders that a bill is almost due.Whatever approach you use, if you know you're going to be late on a payment, contact your credit card or lender ASAP. You might be able to negotiate a grace period or late fee instead of a credit ding.

2. Use less than 30% of your available credit

Maxed-out credit cards don't look good on you. It's important to have a healthy number of accounts and amount of credit available to you, but it doesn't reflect well (especially to the credit bureau algorithms calculating your score) when you're relying too much on credit.High balances on your revolving credit accounts can lower your credit score. Consider paying down – or off! – your higher bills and keeping balances low. Make lump payments each month or – even better – make multiple, smaller payments each month as your credit account allows. Keeping responsible balances shows you know how to handle the credit available to you and are able to cover what you owe.

3. Protect your identity, regularly

Corporate data breaches have made checking your credit score and accounts more important than ever. If your identity has been compromised, it's important to act fast to protect yourself from a) effects on your credit and b) having to cover the damages.Resources are available, including Credit Karma and, to monitor your credit and alert you if something is amiss. Be sure to check what fraud protection your credit card and bank offer.

4. Think long-term relationships... with your credit accounts

The age of your credit accounts is a big deal when it comes to your credit score. Any accounts under 5 years can pull your average age — not to mention, your score — down. So, be mindful when closing old accounts or opening new ones. Tap into a credit score simulator, like NerdWallet, to see how changes to your credit situation, including adding or closing accounts, can affect your credit score.

5. Don't move your debt around

Using no-interest balance transfers to pay off other credit accounts might save you money, but isn't always the best choice for your credit score. Opening new lines of credit to pay off other debt can lower your score by adding credit inquiries to your history, as well as additional accounts, without lowering your balances. If possible, focus on paying down those accounts and keep the balances low to avoid interest payments you don't want to make.

6. Give yourself time

Credit scores are like personal impressions. They don't change overnight. Your credit score typically includes financial data from the previous year – unless you have bankruptcy or collections against you, which stick around for 7-10 years. Keep your credit situation and your score in mind when planning for big purchases, and give yourself enough time to get in great credit shape for taking a big step, like applying for a mortgage.

How healthy is your credit score?

You don't need to be on the verge of buying a house or refinancing to check in with your credit. Use the resources above to see where you stand. If your credit isn't where you'd like it to be, let's start improving it. Work with your Union Home Mortgage loan officer to see what's bogging down your score. Together, we can devise a strategy to clean up your history and position you for a bright financial future.