Building Healthy Credit

Building a Healthy Credit History

Here are tips to help you get on solid ground when it comes to credit.

Build a Healthy Credit History

Getting credit in your name is key to building a healthy financial foundation. Start as an authorized user of a family member’s credit card if you currently don’t qualify for a credit card or loan on your own. Another option is to get a secured credit card in your name, a type of credit card backed by a cash deposit from the cardholder. Many secured credit card borrowers are issued a traditional, unsecured credit card after making on-time payments for some time.

Review Your Credit Report

Regularly check your credit report. A free credit report from shows all the information used to determine your credit score. Checking your credit report allows you to be confident the information in your credit report is accurate and up to date. A good credit score is part of a path to opportunities you may not otherwise be able to access. Lower interest rates are offered to people with better credit scores - that means more money staying in your pocket. It's also easier to get a loan or line of credit when your credit score is in good shape.

Improve Payment History

If you already have a credit history and know your score, pay attention to your payment history,  the most significant single factor used to calculate your credit score. Late payments (even a couple of days), past-due accounts, and accounts in collections all hurt your credit. Regular, on-time payments of the minimum amount (or greater) will improve your credit score. On-time payment history in the range of 18 months or longer will begin to show results in an improving credit score.

Monitor Your Credit Card Utilization

Check your credit utilization if your credit score is not where you want it to be. Credit utilization is calculated by the amount you owe — not relative to your income but compared to the total credit limit available to you, expressed as a percentage. For example, if your card balance is $600 and you have a spending limit of $2,500, your credit utilization is $600/$2,500 or 24%. As a rule of thumb, your credit utilization should be less than 30% for a healthy credit score.

Additional Tips

  1. As you use your credit card or take on other debt, pay down your balance as early as your budget allows. If you can make small payments throughout the month, this helps keep your balance down and lowers your credit utilization.
  2. Decrease spending. Find areas in your monthly budget where you can cut back on spending to build a buffer in your budget and better manage debt payments.
  3. Consider your complete financial picture. Credit and debt management is only one piece of the puzzle. Look at your monthly income and expenses, such as housing, transportation, medical and other costs.

Building a Foundation for Financial Wellness

Healthy credit history and scores are essential – especially during challenging financial situations.

We've partnered with the non-profit GreenPath Financial Wellness. GreenPath’s NFCC-certified counselors talk with people about why credit matters and why it’s a fundamental building block to overall financial health and wellness.

To get a plan for your specific situation, GreenPath can be reached at 1-877-337-3399 (or request a call on their website) to speak with one of their financial wellness experts today. It's free, with no pressure, and 100% confidential.

Source: Federal Reserve
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MyPoint Credit Union