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Tips to Manage and Improve Your Credit Score

According to a recent survey by BMO Harris Bank, the majority of Americans (80 percent) across all ages say they are knowledgeable about how to achieve a good credit rating. Half check their score once a year, while 30 percent check it every few years or less. One fifth do not know their score.

On average, Americans believe a good credit score is 660. Among millennials, that number drops to 625, and those aged 35-54 and 55 and older believe a good score is 675.
Overall findings indicate that while most Americans believe they have a solid understanding of what a good credit score is, there is confusion around attaining it. Harris offers a number of basic tips to manage and improve a credit score, including:

Check your credit report. This should be done at least 60-90 days before applying for a loan in order to make sure that the report is correct. If it is incorrect, notify a credit agency before you apply for a loan. Checking your score will not change the number.

Pay your bills on time. 
When a bill is paid late, or is even 30 days past due, it can show up on your credit report for up to seven years.

Use credit when needed. 
If you never use credit of any kind, it doesn’t mean that you’ll have a great credit history. Lenders generally prefer to see some type of satisfactory payment history.

Use your cards lightly. Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your score by paying the balance off and keeping it low.

Consider that credit needs to be built up. A credit score is something that can take time to improve, so don’t expect immediate changes and plan ahead. Your credit behavior can take months to be reflected in your score.

“The good news here is most Americans are not far off in what they believe is considered a good score, which we generally tell customers is in the 680-720 range. However, there’s some room for improvement,” notes Alex Dousmanis-Curtis, Head of Retail Banking, BMO Harris Bank. “Encouraging education around credit scores is a major focus for us. A credit score stays with you as you go through your financial life, and can impact major decisions.”

Survey results cited in this report are from interviews with an online sample of 1,004 Americans conducted between July 2nd and July 4th, 2014. The margin of error for a probability sample of this size is ± 3.1%, 19 times out of 20.

Source: BMO Harris Bank

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