Understanding and managing your credit score is crucial for financial stability and empowerment. Black Enterprise spoke with Christia’n Annice, founder of eMillions+, a credit repair agency, to bring you essential tips on how to enhance your credit score.
Timely bill payments
One of the most significant factors affecting your credit score is your payment history. Late payments can severely damage your score. For instance, a 30-day delay could lead to a 90- to 110-point decrease in your FICO Score if you’ve previously maintained a perfect payment record. Consistently paying your bills on time is a fundamental step in maintaining a healthy credit score.
Maintain low credit card balances
High balances on your credit cards can negatively impact your credit utilization ratio, a key component of your credit score. To improve your score, focus on paying down cards with high balances relative to their limits and consider requesting credit limit increases to lower your overall utilization percentage.
Be strategic with new credit
While new credit accounts only make up about 10 percent of your FICO score, it’s important to apply for and open new accounts judiciously. Opening several accounts in a short period can lower your average account age, especially if you don’t have a long credit history, potentially reducing your score.
Focus on paying off debt
Transferring balances between cards might seem like a good strategy, but the most effective way to positively influence your credit score is to pay off existing debt. This approach directly reduces your credit utilization and demonstrates responsible credit management.
Implementing these strategies can lead to a stronger financial future. Remember, a good credit score can open doors to better interest rates and more favorable terms for loans and credit cards, ultimately saving you money and providing greater financial freedom.
