iQuanti: Regardless of profession or income level, your credit score plays an important role in your financial life and can impact many financial planning goals—from credit card applications to home ownership.
A few factors affect your credit score, and as a nurse, any student loan debt can make a big impact. However, with the right tactics to understand your credit score, manage student loans, and stay on top of other debts, you can ensure the impact is a positive one. Some specific financial products designed with nurses in mind can help.
What is a Credit Score?
A credit score is a numerical figure that summarizes your credit history. Checking credit scores is a standard method used by lenders to predict how likely you are to repay your loan.
Credit scores range from 300, which is "poor credit," to 850, which is "excellent credit." Higher scores demonstrate consistently good credit habits like paying on time, low credit usage or credit utilization, and lengthy credit history. Lower scores can indicate to lenders that a borrower may be a risky investment because of late payments or the use of too much credit at one time. The line between good and bad scores is a bit murky, and it is normal for a score to fluctuate at times, but it is helpful to keep those numbers in mind as a guideline.
There are a few strategies that can improve your credit score, no matter your credit history. Here are five ways you could increase your score.
1. Know Your Credit Score
To truly determine how you can improve your credit, it is crucial that you understand your credit score. Many free online resources give you the ability to check your credit score when you need to and can show you what factors are affecting your score, such as credit cards, mortgages, auto loans, student loans, and hard credit inquiries. You can also use these tools to observe how your credit has changed over time.
2. Always Pay on Time
Payment history is the most important factor in how credit bureaus compute your credit score, so it's important to always make your payments on time. Late payments hurt your credit score, and consistently paying on time is one of the best ways to help your credit score improve.
You can also make a payment ahead of schedule, which reduces your balance and therefore lowers your credit utilization rate (see below), which could have a positive effect on your score.
3. Pay Down Your Debts
Another contributing factor to your credit score is the ratio of money owed and available credit, also known as credit utilization. The higher your debt is vs. your available credit, the more likely it will negatively impact your credit score. Paying as much debt as you can each month or paying your entire credit card balance, when possible, could help keep this ratio low.
4. Credit History: Keep Your Accounts Open
Another factor is the length of time that your accounts have been open. Keeping accounts open and active, even if you don't use them very much, could positively impact your credit by showing lenders that you have a consistent history of on-time payments.
5. Financial Planning for Nurses
Proper financial planning can be one of the most important tools for nurses and other professionals looking to improve their credit. Nurses often have to balance busy shift schedules and hectic jobs, and managing student loan payments alongside personal financial goals can be daunting. A good financial planner can help you understand your current economic landscape and advise on any necessary changes; improving your credit score is a great place to start.
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Original Source: 5 Ways Nurses Can Increase Their Credit Score