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NHS Credit Tips - Knowing the Score on Your Credit

When it comes to your credit score you should always know where you stand and where you want to go. NHSSA can help you with making smarter overall financial decisions, such as choosing credit products that can help you build or rebuild credit. It can also help you to keep your credit score in a higher range as you monitor your credit report for inaccuracies.

Being mindful of your credit score can allow you to predict with more accuracy whether or not a loan or a credit application will be approved and if you will be able to qualify for a lower interest rate when you borrow. Here are our Top 5 Tips on keeping your credit score in top shape.

Tip #1: Pay Your Bills on Time

One of the best ways that you can improve your credit score is by paying your bills on time. In fact, payment history is one of the primary categories reviewed by the credit card bureaus when determining your credit score. It accounts for 35 percent.

Payments that are delinquent (even if only by a few days) can have a negative impact on your credit score. It can be beneficial to set reminders if you have trouble remembering which bills are due when.


One way to do this is the old-fashioned method of writing the due dates on a paper calendar. If you prefer a more modern strategy, there are many helpful smartphone apps for bills and budgeting.

Tip #2: Pay More Than the Minimum

Paying more than you owe each month on your outstanding debt balance can have multiple benefits, reducing your overall debt load and helping you to pay off balances faster.

If you have more than one debt balance (such as several different credit cards), making more substantial payments on one account while continuing to make at least the minimum payments on the others can help you to focus on reducing these balances one at a time.


Once you have fully paid off one balance, you can then focus on another, and so on, until you’ve fully paid off all of your debts.

Tip #3: Work on Paying Off Debt (Rather Than Just Moving It Around)

One of the other significant factors in determining your credit score is the amount of money that you owe compared to the amount of total credit available. Your total credit available is known as your open credit utilization rate.


It’s best if you aren’t at or near your overall credit limit on your card(s). Utilization refers to how much of your available credit you’re using. It includes the percentage of each credit card, as well as the percentage of total available credit.


Lenders and creditors pay close attention to a borrower’s utilization ratio. Borrowers with a high utilization rate are, on average, less likely to pay back what they have borrowed. Alternatively, someone with a low credit utilization rate will likely have a higher credit score.


For example, if you have a credit card that has a $20,000 credit limit on it, a $2,000 balance is better than a $15,000 one. In this case, the lower balance is given a higher rating for credit scoring.


The amount owed on different types of accounts can also make a difference. For example, it is better to owe $50,000 on a mortgage than to owe $50,000 on a credit card account.

Tip #4: Check for – and Remove – Any Incorrect Information on Your Credit Report

Making sure your credit report is both accurate and up to date is one of the best steps that you can take in boosting your credit score. According to the Fair Isaac Corporation (FICO), the company that provides the credit score model to various financial institutions, the median credit score in the U.S. is 695. Half of those with credit in the U.S. have credit scores that are above this number, and half have scores that are below.


There are several ways to obtain your credit report, including online services that also offer credit monitoring and identity theft protection. It is essential to be careful when seeking a copy of your credit report, though, as you can get lured into paying for services that you don’t want or need.

When you receive your credit report, you should read it over carefully to ensure that all of the details are correct. If you find any inaccurate information, report it to the credit bureau immediately to have it removed from your credit report. Otherwise, it may continue to harm your credit score, along with your chances of obtaining future credit.

Tip #5: Reduce Your Debt-to-Income Ratio

Your debt-to-income ratio, or DTI, is a personal finance measure that compares your monthly debt payment to your overall income. It is one way that lenders measure your ability to manage monthly income and repay debts. DTI is determined by dividing your total recurring monthly debt (such as a mortgage, auto loan, and credit cards) by monthly income.


If you have a low debt-to-income ratio, lenders and creditors see that you have a good balance between the amount of debt that you carry and the amount of income that you earn.


On the other hand, a higher debt-to-income ratio can be a sign that you have more debt than you can support with your income. It makes you a higher lending risk.

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