Rylie Horrall  | Lifestyle Editor

For those who aren’t sure what a credit score really is, it’s something that “reflects credit payment patterns over time,” according to experian.com. It’s an important financial consideration in someone’s life, as it is the deciding factor in multiple scenarios — such as taking out loans or getting additional credit cards later in life. A credit score is found using an algorithm on a person’s credit report, and it takes into account certain factors like account types, how long an account has been open and payment history. Because a good credit score is highly sought after and makes the user look responsible, it’s important to know how to raise it.

One of the simplest things to do is to pay bills when they are due. That repayment history can be used to predict how someone will take care of future settlements. This applies to credit cards, student loans, phone bills, rent, utilities and so on. By missing payments or getting charged a late fee, a negative mark can appear on an individual’s credit score for around seven years. However, according to experian.com, a negative mark’s prominence declines over time as newer payments are more relevant.

Specifically with credit cards, keeping a low balance is vital for a credit utilization ratio. A credit utilization ratio is calculated on the amount incurred on a credit card divided by the total credit limit across all credit cards owned, not just the one that is used. By keeping the ratio below 30%, it shows that the user isn’t maxing out credit cards every single month. It’s also an indicator of how well money and credit is being managed. Furthermore, if a credit card is no longer being used, don’t close it — if it isn’t costing any fees, it can increase the ratio since there is more total credit.

Checking credit reports is another key factor in maintaining good credit scores. If there’s an inaccuracy on a report, it can have drastic negative impacts if it goes unchecked. It could decide if someone can take out a loan or not, or even affect their lending terms and interest rates. According to myfico.com, contacting the credit bureau and organization that sends the credit bureau information can help fix the problem that’s been noticed.

Contact the author at rhorrall17@wou.edu

Photo by Rylie Horrall