how to set credit score goals for 2021

How to Set Credit Score Goals for 2021

Many of us tend to take a “set it and forget it” approach to our credit score. We open a credit card, pay it off monthly and hope our score is a good one. However, it pays to be proactive with your credit. March is National Credit Education Month, and it’s the perfect time to plan your credit goals for the rest of the year. You can make it simple by breaking the goals down into individual tasks.

1. Know the difference

It’s key to understand the difference between your credit score and credit report. Your credit score is based on the data in your credit report. However, your credit report does not contain your score. Your report is a detailed look at the type of credit you’re utilizing, credit limits, payment history and more. There are three primary credit-reporting bureaus: TransUnion, Experian and Equifax. They compile credit reports, and you can request access for free once a year from each bureau.

Your credit score generally ranges from 300 to 850. A score of about 670 or higher is considered a “good” score, while 740 and up is considered “very good” and “excellent.” Your score might be different depending on the bureau and the credit-scoring model they use. However, they all base their numbers on the same information, such as your repayment history and how much credit you’re currently using. Remember, checking your score won’t hurt it, so use this information to your advantage to consistently monitor your progress as you improve.

2. Take a look

Now that you know the basics, it’s time to look at your credit report! You can access a free credit report once a year. You may have heard that checking your credit report will negatively impact your credit score – this is only partially true. There’s a difference between a “soft” credit report check and a “hard” inquiry. A hard inquiry will impact your score, but these only occur when you apply for a loan, such as a home or car loan. A soft check occurs when you ask for a free credit report, and these do not impact your score.

3. Take positive action

Next, identify how to move forward. Up to 90% of reports will contain some type of error, leading to a credit application being denied. By keeping an eye on your credit report, you can identify errors and contact lenders to correct them. You can also use this information to identify credit blemishes. Remember, you can actively manage and improve your credit. By locating areas where you can make progress, you can work with lenders to move forward in a positive way!

4. Set goals for your credit score

With this information, you’re in great shape to set credit goals for the future. Before purchasing a home, you might decide to set a goal for your credit score. If you’re married, remember that both your and your partner’s credit are important. With this dream in mind, it’ll be easier to keep your eye on the prize while working on improving your score. One of the best ways to boost your score is to pay all your bills on time. You can also keep your credit utilization ratio to 30% or below, and only open new credit accounts as needed.

You’re not alone

Great credit is an opportunity to seize your dreams, so it’s important to work with a lender you trust. With 25+ years in business, the experts at First Centennial Mortgage can help you achieve the American dream of homeownership. Think of First Centennial Mortgage as your mortgage finance mentors, helping you every step of the way.

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