National Credit Education Month: Tips to Improve Your Credit Score & Avoid Common Mistakes

March is National Credit Education Month, making it the perfect time to take control of your credit health. Your credit score plays a major role in your financial well-being, influencing everything from loan approvals to interest rates and even job opportunities. Understanding how to build and maintain good credit is essential for financial success. A strong credit score can help you qualify for better financial products, save money on interest rates, and provide financial security in the long run.

How to Improve Your Credit Score

1. Pay Bills on Time – Your payment history accounts for 35% of your credit score. Late payments can significantly impact your score, so set up automatic payments or calendar reminders to ensure you never miss a due date. Even one missed payment can stay on your credit report for years.
2. Keep Credit Utilization Low – Try to use less than 30% of your available credit limit. For example, if you have a credit card with a $10,000 limit, aim to keep your balance below $3,000. High balances can signal financial risk to lenders and lower your score.
3. Check Your Credit Report Regularly – Reviewing your credit report allows you to spot errors and dispute inaccuracies that might be harming your score. You are entitled to a free credit report annually from each of the three major credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com. Checking your report also helps you detect potential fraud early.
4. Diversify Your Credit Mix – Having a mix of credit accounts, such as credit cards, auto loans, mortgages, and personal loans, can positively impact your score. Lenders like to see that you can responsibly manage different types of credit.
5. Avoid Opening Too Many Accounts at Once – Each time you apply for new credit, a hard inquiry is added to your credit report. Multiple hard inquiries in a short period can slightly lower your score and make lenders wary of too much new credit activity. Apply only when necessary.
6. Keep Old Accounts Open – The length of your credit history accounts for about 15% of your score. Keeping older accounts open and in good standing can help maintain a longer average credit age, which benefits your score.

Common Credit Mistakes to Avoid

• Missing Payments – Even one late payment can stay on your credit report for up to seven years and lower your score significantly. Consider setting up payment alerts to stay on track.
• Maxing Out Credit Cards – Using all of your available credit can negatively impact your score and signal financial distress to lenders. Keep balances low and pay them off regularly.
• Closing Old Accounts – Closing credit card accounts, especially older ones, can shorten your credit history and reduce your overall available credit, which may lower your score.
• Ignoring Your Credit Report – Mistakes on your credit report happen more often than you might think. Reviewing your report regularly helps catch errors that could unfairly lower your score, such as incorrectly reported late payments or fraudulent accounts.
• Applying for Too Much Credit at Once – Each hard inquiry can slightly reduce your score, so only apply when necessary. Too many applications at once may also indicate financial instability to lenders.

Improving and maintaining your credit score takes time, but small, consistent steps can lead to significant financial benefits. Good credit can open doors to better financial opportunities, lower interest rates, and greater financial security.

At Casey State Bank, we’re here to help you achieve your financial goals. If you have questions about credit, need guidance on financial planning, or want to explore our financial products, reach out to us today!

Need financial advice? Visit a Casey State Bank branch to learn more about managing your credit and building a strong financial future.