“People tend to overthink credit, and they think that it’s this complex, mysterious, unknowable beast,” says Matt Schulz, chief industry analyst at CompareCards.com. Boosting your credit score doesn’t have to be complicated, though.
Schulz takes the mystique out of building up and maintaining good credit by breaking it down into three easy steps.
Step one: Make sure you pay off your card on time and, if possible, in full every month. “Making that payment on time each month is the single biggest factor in credit scoring,” says Schulz.
Step two: Sign up for auto-payments so you never miss a deadline. Taking a few minutes to set up auto-pay can save you the hassle of remembering when to make a payment and prevent a dip in your credit down the line if you ever forget. Just one payment made 30 days late can take up to 100 points off your score, Schulz says.
Step three: Maintain a low utilization rate, which is the ratio between how much you owe on a credit card compared to the available credit.
“You shouldn’t use more than 30%” of what you can, he says, since “that’s when it starts impacting your credit score.”
Whether you’ve just opened your first card or you’ve been building your credit for decades, check out more of Schulz’s advice for how to establish and maintain a good credit score in the Grow video above.
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