Check your credit score annually

As you review your entire financial picture, make looking at your credit score part of your review‡. Go through your report and look for any errors that might have occurred. If you see an error, request that it is fixed as it could impact your score. By reviewing your credit report, you can see your entire picture at once instead of just looking at individual credit cards or loans.

Make a plan

If you decide to use credit cards or would like to apply for a loan, create a budget first. Understanding how much you can spend or how much you can borrow will help you track your money. As you plan, think about how you will handle an unexpected expense or if there are areas where you can cut back a little.

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Make your payments on time

According to FICO , your payment history makes up 35% of your credit score. To ensure this positively impacts your score, make your credit card or loan payments on time. If you can, set up automatic payments so you don’t have to think about it every single month. Then check to make sure the payment clears when you review your monthly budget. In addition, if you can, pay more than the minimum balance due every month to keep any interest on your credit card down.

Pay off the lowest balance

One way to improve your credit score if your goal is to raise the number is to pay off your debts. Compile all your outstanding balances and start with the smallest one first. Before you decide to consolidate any debts, discuss your options with a financial advisor to make sure you won’t be inundated with additional fees or a higher interest rate.

And if you want to improve your credit score, time can be your friend. Don’t feel pressure to stress your budget by paying off debts quickly. Keep your payments manageable for your budget but know that you can positively impact your score with every small action.

Learn how to better manage your money to build a stronger financial future for you and your loved ones through the Family Finances playlist on the UMB Financial Education Center.

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