Your credit score is your financial fingerprint that follows you everywhere. (Ever heard of Equifax? Experian? What about TransUnion?) These are some companies you need to know. Here are some dos and don’ts when it comes to your credit.
A credit score is a universal way of showing your creditworthiness. It is a number between 300-850. It is important to know how this number is derived so you do not make a mistake of inadvertently lowering your score.
Credit scores can impact your interest rates when you are ready to buy a car, apply for a mortgage, or even take out a loan, so listen up.
Pay your bills on time. This accounts for 35% of your score.
Don’t close credit cards when they are paid off. This affects the length of credit history and accounts for 10% of your credit score. (You can cut them up all you want, just don’t close them.)
Keep that utilization rate below 30%. Anything above, you’re diggin’ your credit score on a monthly basis. For example, if you have a CC that has a max limit of $1,000, if you cannot pay off the balance on a monthly basis, you will want to keep the revolving balance at or below $300.
It’s ok to have a mix of different types of credit. Having this will help your credit and accounts for 10% of your credit score.
Last and certainly not least, if you are constantly obtaining new credit accounts, this can ding your credit score and accounts for 15% of your overall credit score.
Getting an excellent credit score may feel like walking through a maze blindfolded—but don’t be blind—keep yourself educated on what affects your credit score and level up.
Rianka R. Dorsainvil, CFP®️ is the Co-Founder and Co-CEO of 2050 Wealth Partners a virtual, fee-only comprehensive financial planning firm dedicated to serving first-generation wealth-builders, entrepreneurs, and thriving professionals. Rianka also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.
As an award winning successful, millennial Certified Financial Planner professional, Rianka offers a unique perspective not only on the current state of the financial service industry, but on how to stay relevant in an ever-changing world.
Rianka serves as a member of CNBC’s Digital Financial Advisor Council and CFP Board’s Diversity Advisory Group, is a Forbes Personal Finance Contributor, and has been recognized for her accomplishments and leadership within the industry by leading publications and organizations such as Investment News’ inaugural 2017 Women to Watch Rising Star and Wealth Management’s Ten to Watch in 2018. She has been published in PBS NewsHour, Forbes, USA Today, Black Enterprise, CNBC, Women’s Health, and more.