Does having a higher credit score really matter? Well, let's take a look at some of the things having a higher credit score could do for you.

By having better credit, then it is more likely that not only would you be likely to get approved for the following, but also it may impact how much you would be paying for:

• Mortgage
• Apartment lease
• Auto loan
• Personal loan
• Credit card

Here are some suggestions and ideas that you can take to start improving your score.

1) Pay All Bills on Time

There is a formula that goes into calculating a credit score, but of all the factors your payment history carries the most weight. This represents how consistently you pay your bills on time, and being late even a few times can drop your score.

Note: If you have outstanding debt, then it is important that you make every payment by its due date. Staying current on your obligations helps raise your score, even if you can't get your debt paid off for a while.

But it's not just your debt payments you need to stay current on. Pay your "must-pay" expenses; rent &utilities for one, but if you medical bills, and then any other expenses that could go into collections if you ignore them or fall behind.

2) Remove Errors From Your Credit Reports

You have three different credit reports — one from each major reporting bureau (Experian, Equifax and TransUnion). But those credit reports may not be consistent, and may not all be correct.

Credit report errors aren't uncommon.

Whether you had an old debt that got squared away, but still shows as outstanding, or weird circumstances like someone with the same name having a debt that gets associated with your history (it happens!).

It's important to check your credit report for errors and resolve any you find. Unfortunately you may have to go to each credit bureau separately to get mistakes corrected. The way it works is you report an error and they let you know how to remedy the problem. Sometimes it may be with the credit bureau directly, but in other cases, you may need to reach out to the original creditor. You're entitled to at least one free copy of your credit report per year from each bureau, so take advantage of that.

3) Pay Off Existing Credit Card Debt

The average U.S. consumer had $5,525 in revolving credit card debt as of 2021. If your credit card balances are in that ballpark, they could be destroying your credit score.

A big factor in calculating credit scores is utilization, or the extent to which you're using your available credit. Your utilization ratio needs to be 30% or below to improve your credit score. If you owe close to $5,500 on your credit cards and your total credit limit is $10,000, that's a utilization ratio of over 50% — not good.

To improve that ratio, you need to put an action plan in place to pay down the debt. At ARIES Foundation we talk about using 1 of 2 methods; Math* or Momentum*

Another option that might make sense is consolidating your credit card debt that could make it a lot more affordable to pay off. A balance transfer could make sense depending on the situation (0% APR for a period of time).

You can also look at consolidating your debt via a personal loan. With a personal loan, you can borrow money for any reason. In this case, you'd borrow enough to pay off your credit card balances, then repay your personal loan in installments. A personal loan generally charges less interest than a credit card (the exception is a 0% introductory rate card, but those intro rates only last for so long). It also won't count toward your credit utilization ratio, because it's an installment loan, not a revolving credit loan.

4) Piggyback on Other People's Good Credit

Another factor in calculating a credit score is length of credit history. In this regard, being younger can work against you. If you've only been working and paying bills for a handful of years, you won't have the same credit history as someone with accounts in good standing for a decade or longer.

On the other hand, you can ask to be an authorized user on a family member's credit card that's been open for many years. That way, you benefit from that person's long-standing credit history.

Bottom Line: Don't Ignore Your Credit Score

Got Questions? Ask Us. We Can Help With That.

The ARIES Foundation for Financial Education, Inc is a nonprofit dedicated to the mission of trying to help everyone have a better relationship with their money.

Visit our website: www.ariesfoundation.org

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Check out our videos on Youtube:www.youtube.com/channel/UC8XA1to8IHXsqsrGfWfRaHA

*MATH & MOMENTUM are 2 paydown strategies that the ARIES Team utilizes to teach individuals different ways to take control of your outstanding debt.

Want to learn more about debt control then shoot us an email: info@ariesfoundation.org