Most of us are aware that our credit scores are in part, a reflection of our ability to consistently make on-time payments to our outstanding financial obligations. We know that missing payments can hurt our credit, defaulting on loans can devastate it, and bankruptcy can obliterate it.
But what about building better credit? Of course, we all want to do this. Though there’s often uncertainty about where to start. RISE can help you get started off on the right path. If you want to boost your credit score, the first step is learning the basics of what can hurt and more importantly, what can help. So, let’s take a closer look at a few of these determining factors.
CREDIT SCORE FACTOR 1: ON-TIME PAYMENTS
HOW THEY HELP:
A history of making on-time payments signals to lenders that you’re a responsible borrower. The more on-time payments you make, the more it will help boost your credit score. This
elevated credit score, in turn, can help you become eligible for more and ultimately less expensive forms of credit. Additionally, the more on-time payments you make, the less impact an occasional missed or late payment will have on your overall credit score.
CREDIT SCORE FACTOR 2: MISSING PAYMENTS
HOW THEY HURT:
It’s no secret that missing a payment can negatively impact your credit score. In fact, late payments or any other “derogatory items” can stay on your credit report anywhere from 7 to 10 years. And these ‘dings’ to your credit will weigh your credit score down.
THE GOOD NEWS:
Even the most responsible borrowers have occasionally missed or been late on a payment. It happens! If you’ve been struggling to make on-time payments, it’s never too late to get back on track. Even if a missed payment from 5 years ago appears on your credit report, it will factor less into your credit score if you’ve been making on-time payments for the past 5 years.
CREDIT SCORE FACTOR 3: TIME
HOW IT HELPS:
Time is your biggest ally when it comes to boosting your credit score. Over time, “derogatory items” tend to have less impact, especially when they’re eclipsed by a history of on-time payments. Remember, patience is key when it comes to improving your credit score. Stay on top of your payments and you’ll notice a positive change to your credit score — in no time.
CREDIT SCORE FACTOR 4: LATE PAYMENTS
HOW THEY HURT:
Every now and again, a late payment happens. Life hits you when you least expected it, forcing you to make help the difficult decision to hold off on making a payment. You already know that late payments can hurt your credit score, but sometimes, you just don’t have the money. That’s why it’s a best practice to pay extra on your loan obligations (when you can). A little extra planning can help you stay ahead of any future rough patches. At RISE, we encourage our customers to pay extra to help them reduce the overall cost of their loan!
THE GOOD NEWS:
Did you know that even if you are “late” in making a payment, the credit bureaus may never be the wiser? If you are caught up with your payments before your account is 30 days past due, the indiscretion will typically never show up on your credit report. So, if you have a RISE loan and you know you won’t be able to make your payment on-time, give us a call. We’re on your team, after all! And we’re here to help in any way that we can.
CREDIT SCORE “X” FACTOR: YOU
RISE knows that your credit score is important to you. Just by reading this post, you’re already off to a great start. And by following these tips, it’s only a matter of time before you see your credit score up. So, relax. Time is on your side. You got this!