TULSA, Okla. — A credit score acts as a financial report card, determining not just the interest rates paid for mortgages and car loans, but also impacting housing, employment, and utility costs.
Bankrate Financial Analyst Ted Rossman said credit scores represent how likely a person is to repay a lender.
The score is based on payment history, the amount of debt, and how successfully various types of credit are managed over time.
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“It’s not just for car loans and mortgages; apartment landlords will look at your credit, and some employers do credit checks,” Rossman said.
Utility providers and cell phone companies also use credit scores to determine deposit amounts.
“Even some Utility providers, they’ll charge you higher deposits if you have bad credit, whereas if you have good credit, you don’t need to put down a deposit at all. Cell phone companies are similar. It really has wide-reaching ramifications,” Rossman said.
Because of its wide-reaching ramifications, experts recommend checking your credit score at least once a year. Free scores and reports are available through banks, credit card issuers, Experian, and FICO.
“The Federal Trade Commission says 1 in 5 Americans have errors on their credit reports,” Rossman said.
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Fixing those errors can improve a score. Another major factor is credit utilization, the percentage of available credit used. Credit bureaus only see the balance at the time it is reported, regardless of whether the balance is paid off each month.
“Paying down that credit card debt can have a meaningful impact as well. Like if you charge $4,000 towards a $5,000 limit, you’re using 80% of your available credit, that looks like a lot. Even if you pay in full,” Rossman said.
To lower a high statement balance, Rossman suggests making an extra payment in the middle of the month before the statement comes out or asking for a higher credit limit.
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Credit user Brooke Freeman said she monitors her credit score through her credit card accounts. She watches the percentage of credit she uses to help keep her score up.
“I have like a credit card, I try to just put my groceries on, so that is like a percentage of that one, and then I have one I just put my gas on because that’s like a percentage every month,” Freeman said.
Rossman shared several other strategies to improve credit scores, noting that most people can see meaningful improvement within six months.
- Consumers can ask lenders for a “goodwill deletion” to remove a past late payment from their records.
- People can also become an authorized user on a parent’s or spouse’s credit card to benefit from their good credit history.
- Programs like Experian Boost allow consumers to get credit for rent payments, streaming services, and utilities.
- Credit builder loans act as a form of forced savings that report to credit bureaus.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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