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Achieve your high score with a credit game plan!

credit score on phone with flexed arms

Need a coach to help you cross the finish line? We have a financial counselor ready to coach you to a winning season! Meet our financial counselor.

Your credit score is a powerful tool that influences your financial opportunities and future. However, navigating the world of credit can be daunting, with pitfalls and misunderstandings lurking around every corner. In this comprehensive guide, we’ll dive into the key components of your credit score, shed light on common missteps and misunderstandings, and provide actionable tips to help you achieve financial fitness.

Payment History

Payment history is the cornerstone of your credit score, comprising 35% of the total score. One of the most frequent missteps people make is missing payments or making late payments, which can have a significant negative impact on your score.

Coach’s Tip: Set up automatic payments or reminders to ensure you never miss a payment. Even if you’ve made late payments in the past, focus on making on-time payments moving forward to improve your score.

Credit Utilization

Credit utilization, accounting for 30% of your credit score, measures the amount of credit you’re using compared to your total available credit limits. Maxing out your credit cards or carrying high balances can hurt your score, even if you pay your bills on time.

Coach’s Tip: Aim to keep your credit utilization ratio below 30% by paying down balances and avoiding unnecessary spending. Consider making multiple payments throughout the month to keep balances low and improve your score.

Length of Credit History

The length of your credit history contributes 15% to your credit score. One common misunderstanding is that closing old accounts will improve your score. However, closing accounts can shorten your credit history and negatively impact your score.

Coach’s Tip: Keep old accounts open and active to maintain a longer credit history. Even if you don’t use them regularly, keeping them open can benefit your score.

New Credit

New credit accounts for 10% of your credit score and includes factors like the number of new accounts you’ve opened and recent credit inquiries. A common misstep is applying for multiple new credit accounts within a short period, which can signal risk to lenders.

Coach’s Tip: Be strategic with new credit applications. Limit the number of new accounts you open and only apply for credit when necessary. Multiple inquiries can lower your score, so be mindful of how often you apply for credit.

Credit Mix

Credit mix makes up the final 10% of your credit score and considers the variety of credit types you have. Some people mistakenly believe that having too many credit accounts will improve their score, but having too much available credit can actually be detrimental.

Coach’s Tip: Aim for a balanced credit mix by having a variety of credit types, such as credit cards, installment loans, and mortgages. Focus on responsibly managing the accounts you have rather than opening new ones unnecessarily. You can easily monitor your credit score and look for unexpected changes online or via the Keesler Federal app.

Understanding the components of your credit score and avoiding common missteps and misunderstandings is key to a successful game plan for exceptional financial fitness. By staying informed, proactive, and committed to responsible credit management, you can build and maintain a strong credit score that opens doors to better financial opportunities. If you need a personal coach to help you improve your game, reach out to our financial counselor. Remember, your credit journey is a marathon, not a sprint. Stay patient, stay focused, and stay on the path!

Need a coach to help you cross the finish line? We have a financial counselor ready to coach you to a winning season! Meet our financial counselor.

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