We may talk about money a lot, but here’s a quick vocabulary lesson: 

The word credit is related to the word "credibility". Credibility, as you probably know, means “the quality of being trusted and believed in,” according to Dictionary.com.

Your personal credit score reflects whether or not financial institutions think you are trustworthy and whether they should believe you when you say you’re going to pay them back for that loan on time.

So why does all of this matter? Your credit score can spell the difference between approval or rejection — and how much you pay — for a mortgage, an apartment, a car and so much more. They basically tell a story whether or not you have good financial sense.

If your credit score isn’t what you want it to be, there are a few ways you can improve it. And once you improve your credit score, your access to credit — the amount you can borrow — will go up, too.

So, how do you become more trustworthy to lenders?

1. Pay your bills on time. Your payment history is the single most important factor in determining your credit score. A missed credit card payment can significantly impact your score. Set a reminder a few days before your bill is due to ensure you never miss a payment.
2. Work to pay down outstanding debt! If any of your cards are carrying a balance from month-to-month, showing that you are working to get rid of this debt can do wonders for your credit score. Maximize your monthly payment by trimming an expense category in your budget and channeling that extra money toward your credit card bill. Don’t be afraid to reach out to your credit card company to ask for a lower interest rate as you work to pay off debt. Finally, consider consolidating credit card debt with a personal loan from Commonwealth One, which will help you get rid of your credit card debts and leave you with one lower-interest payment to make each month.
3. Look for errors on your bills and credit history. A fraudulent charge on your credit card or another error can bring down your score without your knowledge. That’s why it’s important to check your statements each month and to look for charges you don’t remember making. If you see anything suspicious, contact the credit card issuer immediately to dispute the charge. It’s also a good idea to get your free credit report once a year from annualcreditreport.com for a more comprehensive look at your credit usage and signs of possible fraud.
4. Use credit cards responsibly. Credit cards can easily turn into spending traps if you aren’t careful. When making a purchase, treat your credit card like cash. Pay for your purchases promptly out of your regular budget, and try to decrease relying on credit cards by using your emergency fund for real emergencies.
5. Be sure to report your responsible payments. Did you know that your monthly payments for rent, utilities, your car and more? You’ll need to sign up for a rent reporting service like PayYourRent.com, or contact the major credit reporting bureaus to sign up for a similar service for utilities and more. Every payment you make on time and in full can help boost your credit score.

Interested in learning more about your credit score and how to boost it? We’re here for you! CommonWealth One has a ton of financial education resources for you. You can get started by visiting www.cofcu.org/financial-education. Or, you can call us or stop by to make an appointment with a financial advisor.

We want your credit score to be as high as possible — and we’re happy to help you do that. Let us know how we can help!

Learn more about credit score: Credit Scores (banzai.org)

Request a consultation with a financial counselor: Financial Counseling | VA Washington D.C. Advisors | COFCU