All about credit

We hear a lot about credit — credit reports, credit scores, credit freezes, credit monitoring. What does it all mean for you? Your credit matters because it affects your ability to get a loan, a job, housing, insurance, and more. It’s important to understand what your credit is and how to protect it. Your credit score is a key part of your financial health. Here’s how to boost it and open doors to better financial opportunities.

What is credit?

When people talk about your credit, they mean your credit history. Your credit history describes how you use money. For example: How many credit cards do you have? How many loans do you have? Do you pay your bills on time?

Understand Your Credit Score

Your credit score is a number that shows how trustworthy you are with borrowing money. It ranges from 300 to 850, with higher scores being better. A good credit score can help you get lower interest rates on loans, better credit card deals, and even make renting an apartment easier.

Check Your Credit Report

“Good” or “bad” credit is based on your credit history. You can find out what your credit history looks like by checking your credit report. Your credit report is a summary of your credit history. The three nationwide credit bureaus — TransUnion, Equifax, and Experian — collect credit and other information about you.

The credit bureaus must make sure that the information they collect about you is accurate. The Fair Credit Reporting Act (FCRA), a federal law, requires this. But you want to check your credit report regularly to be very sure the right information is there. Get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) at least once a year. Look for any mistakes or suspicious activity. If you find anything that looks weird or wrong, you can dispute it.

Pay Your Bills on Time

Paying your bills on time is the most important factor in your credit score. Set up reminders or automatic payments to ensure you never miss a due date. Even one late payment can hurt your score.

Get Your Rent Reported

For most people, our housing payments are the highest monthly payments we make. Now, you can get your on-time rent payments reported to the credit bureaus. Check to see if your property already provides this service. Some service providers will charge you a fee to report your rent to the credit bureaus, but other companies, like Bilt Rewards, will report for free if you’re living in the Bilt Alliance. Not only that, but you’ll also earn Bilt points when you pay your rent!

Reduce Your Debt

Keep your credit card balances low. Try to use less than 30% of your available credit. For example, if you have a credit limit of $1,000, aim to keep your balance below $300.

Don’t Apply for Too Much Credit at Once

Each time you apply for a new credit card or loan, it results in a hard inquiry on your credit report, which can slightly lower your score. Limit how often you apply for new credit.

Keep Old Accounts Open

The length of your credit history affects your score. Keep older accounts open, even if you don’t use them much. They contribute to a longer credit history, which can help your score.

Diversify Your Credit Mix

Having different types of credit (like a credit card, car loan, and student loan) can positively impact your score. It shows you can manage various types of credit responsibly.

Become an Authorized User

If you’re new to credit, ask a family member with good credit to add you as an authorized user on their credit card. This can help build your credit history.

Final Thoughts

Improving your credit score takes time and discipline, but it’s worth it. A good credit score can save you money and make your financial life much easier. Start with these steps, stay consistent, and watch your score grow!