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- Certified Financial Planner Lauryn Williams says you should do something to improve your credit every day.
- Your credit score can be used for everything from mortgage applications to loans.
- Pay your bills on time every month, get out of debt, and pay off credit card balances in full.
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According to Certified Financial Planner Lauryn Williams, having good credit is more important than ever due to lingering inflation, higher interest rates, and layoffs.
A good credit score, defined as 670 or above with the FICO credit model, is crucial if you want to qualify for the lowest mortgage rates, lower credit card interest rates, and more. Potential lenders are more likely to approve someone with a 700 credit score than a 550 credit score.
"You may be able to get approved for a mortgage with a 620 credit score," says Williams, "but why would you want to? You will be paying the highest interest rate the lender offers, which means that your mortgage payment will be a lot higher."
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Here are a few steps Williams recommends taking to increase your score and get past the 700 mark:
1. Never miss a payment
"You can't have good credit if you don't pay your bills on time," Williams says. "This is why it is so important not to be in debt and not to live paycheck to paycheck, because your credit report does not care if you were laid off or if you were sick; it only cares about how you pay your bills." says Williams.
2. Pay off your entire credit card balance every month
Making just the minimum payment every month will ensure you pay your bills on time, but it will not help grow your credit score — especially if you are carrying a balance from month to month.
"Paying your credit card off every month shows potential lenders that you are not in over your head and that you know how to use credit properly. It also positively impacts your credit utilization, which affects your credit score. If you are already in debt or carrying a balance from month to month, why would a lender extend more credit to you?" Williams states.
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3. Take care of your credit every day
"There is something that you can do for your credit every day," Williams says. "Pay your bills on time, check your credit utilization, and get out of debt."
Williams also recommends checking all three of your credit reports every quarter to see if there are any corrections that need to be made.
"When you apply for a job, you typically need references. Think about your credit report as a reference for the job you did handling your credit," Williams told Business Insider.
Senior Personal Finance Reporter and Spokesperson
Jennifer is a Senior Personal Finance Reporter and Spokesperson for the Personal Finance vertical at Business Insider. She started her career covering personal finance at Black Enterprise Magazine, went on to CNBC where she covered personal finance, women and money and tech and then Forbes, where she reported on personal finance, business, tech and money matters related to the economy, investing, credit and entrepreneurship. Jennifer is also the author of Thrive!...Affordably: Your Month to Month Guide to living your Best Life without breaking the bank. The book offers advice, tips and financial management lessons geared towards helping the reader highlight strengths, identify missteps and take control of their finances. In addition, she has extensive experience as an on-air financial commentator and has been a featured expert discussing credit and savings, investing and retirement, mortgages and all things money and personal finance. She has an ability to discuss and simplify complex financial issues and make them easier to understand. Follow her on Twitter @jstreaks.
