Interest rates are at historic lows again and you might be thinking about purchasing a home or refinancing your mortgage. However, if your credit score is less than stellar, that may not be an option for you.

Your credit score is a three-digit number used by lenders to help them determine how likely they are to be repaid on time if they loan you money or you open a credit card. A good credit score helps you qualify for the best rates and terms when you borrow money or even pay for insurance.

If your score isn’t what you’d like it to be, you’re not alone. Here are some ways to help increase your score and keep it there:

Review Your Report Regularly

Whether you have a low score or a high score, you should regularly check your credit report to monitor it for changes and activity to make sure it’s accurate. This can help you detect fraud and take action to correct it. By law, you’re entitled to a free copy of your credit report each year from the three major credit reporting agencies: TransUnion, Experian and Equifax. Visit www.AnnualCreditReport.com to get a copy of your report. You can request from all three agencies at once, or one at time to monitor your credit throughout the year. If you find discrepancies on your report, contact the credit bureau agency right away.

Always Pay Bills on Time

One of the biggest factors that contributes to your score is payment history, which makes up 35% of a FICO Score. Late or missed payments can have a major impact on that score and while you can improve your score with consistent timely payments, it will take time for your score to reflect the good payment pattern. Many companies allow you to enroll in automatic payments, or could use a service like Bill Pay from BLC Community Bank. It’s easy to use and one of our bankers will be happy to help you set it up!

Decrease Your Debt Ratio

Credit utilization is the next largest factor accounting for 30% of your total credit score. Credit utilization is the percentage of available revolving debt that has been borrowed. It’s calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. The higher your debt ratio, the lower your credit score will be. Try to aim for less than 30% utilization of your available credit.

Don’t Avoid Debt Altogether

While cash might be king, paying everything in cash may mean you have no score for lenders to use. Having good debt – debts that you paid on-time consistently – is good for your score because it shows you are a reliable borrower. This doesn’t mean you should go and open several new credit accounts, as multiple hard inquiries can negatively impact your score as well. However, having a credit card that you use wisely and consistently pay off each month can help you build history and positively affect your credit standing.


Take these tips into consideration and make a plan for improving your score. Begin the task of paying down debts – with strategies like the Snowball Method – and avoid opening any new accounts or acquiring additional debt.


NMLS #402793