Arizonans looking to increase credit scores: Do this!

PHOENIX (3TV/CBS 5) — A good credit score means much more than a lower interest rate. Your score determines what credit cards you can get, and many insurance companies use your score to determine how much you pay for car insurance.

Consumers usually find out their credit scores when they apply for a loan. In many cases, they discover it’s lower than they thought. But it’s never too late to turn things around. “If you can at least get your own personal situation in order, that’s going to benefit you the most,” Nathan Grant told On Your Side. He’s a financial specialist with MoneyTips.com.

He explains the most important factor that dictates your score is your payment history. In other words, pay your bills on time. “Even a single late payment. Even if you’ve been pretty good most of the time, just one late payment can remain on your credit report for seven years. If you can avoid that, you’ll want to,” he said.

According to Grant, the amount of debt you owe is the next big factor determining your credit score. The golden rule is that your credit utilization should be less than 30%, which means if you have $10,000 in total available credit, your balance should not be more than $3,000. “One thing you hear a lot about is 30%. Some people try to shoot at that like it’s some kind of target. But it really means anything above that amount is really going to be affecting your credit score. But the lower, the better,” he explained.

Grant also tells On Your Side to keep old credit accounts open to help increase your score. For example, canceling a credit card you’ve had a long time can lower your score. He says consumers do it all the time, thinking it’s the right decision. “That’s one of the biggest things; we tend to make hasty decisions that might be well-intentioned. But then people say, ‘If I had known that, I wouldn’t have closed it.’ Things like that,” he said.

When it comes to credit scores, 650 and above is considered fair. Above 700 is good. More than 750 is excellent. The scoring usually maxes out around 850.

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