The Keys to Building and Maintaining Good Credit
Credit is one of the most important components of achieving your financial goals.
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There are several ways to work towards achieving your financial goals, and your credit score is among the most important.
A recent WSFS Bank study of 2,005 Americans between the ages of 18-40 found that 65% of respondents agreed they understood what types of behavior impact their credit scores.
A credit score helps businesses determine whether to lend you money, under what terms and the likelihood of you being able to pay them back. Those factors may impact the interest rates you’re offered on loans for a house or car, insurance policy terms, employment applications and more.
These are some common things that impact your credit score:
Amount of Credit Utilized
Length of Credit History
New Lines of Credit
The same WSFS Bank study found that 36% of respondents felt that building good credit was a financial goal out of reach for them and 78% said they weren’t good at maintaining credit.
For Millennials and Gen Zers, 66% said they know how to improve their credit score.
“While overspending is often the first thing that pops into consumers’ minds when they think of financial troubles, financial stagnation has played just as large a role in recent years, especially for younger generations,” said Vernita Dorsey, SVP and Director of Community Strategy at WSFS Bank, in a statement.
Generally, a credit score just under 700 and above is considered good, and a score above 800 puts you in the top classification.
“Despite the challenges faced, these generations still view their overall financial situations positively, and with the help of online resources and financial institutions they can increase their money management and financial acumen,” added Dorsey.
Given the value of good credit, there are steps you can take to improve your credit score.
Here are a few ways to improve your score:
Pay Down High Interest Loans
Work on Your Debt to Credit Ratio
Keep an Eye on Your Credit Report
In addition to these steps, living within your means is another effective way to improve and maintain your credit score - only open accounts that are needed and that you are confident you can pay back.
A number of free, online resources are available to help you get more comfortable with various financial topics, such as WSFS iQ.