“ A bank is a place that will lend you money if you can prove that you don’t need it.” — Bob Hope


Have you noticed a recent rise in the number of credit card offers filling up your mailbox? Are the offers more enticing than they’ve been in the past, perhaps with lower interest rates or better incentives? Have you wondered why so many offers to refinance your mortgage or home equity line of credit are suddenly coming your way?

Well, the answer is simple. Your credit score likely got a boost recently. According to a report issued by the New York Federal Reserve, credit scores are on the rise, with some jumping  by as much as 40 points.

Why did your credit score increase?

Last year, the three major credit bureaus – Equifax, Experian and TransUnion – announced an overhaul in how negative information affects an individual’s credit score, following a review by the Consumer Protection Bureau. After evaluating their current reporting practices, all three firms have begun implementing a new set of standards for collecting information and calculating credit scores.

Gone are the days when unpaid library fines were held against you. Banished from your credit profile are the unpaid traffic tickets stuffed into your glove box. Fighting with your insurance carrier over unpaid medical bills? Don’t fret, that will soon be scrubbed from your credit report, too.

Why should you care about your credit score?

Typically issued by FICO, credit scores are three-digit numbers that represent your financial history and health. These scores are extremely important because financial institutions use them to judge your ability to manage your finances. And, based upon that, they’ll decide if you’re a worthy credit risk. Credit scores can range anywhere from 300 to 850; a score near 700 is considered good and anything over 740, excellent. The higher your score, the better your chances are for securing a low interest rate on loans or having your application for that dream apartment accepted. By the way, your business also has its own credit score – you can learn all about that from this post from Lend Genius.

While one can make the argument that calculating credit scores equates to fuzzy math, there is a general rule of thumb for what goes into figuring out that magic number. Simply put, it is a compilation of the following ingredients:

Payment history

-How often do you pay your bills on time?

Amount owed

-What does your debt look like versus your total available credit?

Length of credit history

-How long have you been in the game?

Credit mix

-Can you responsibly manage debt from a variety of sources like student loans, car payments, and utility bills?

New lines of credit

-How frequently do you seek out a new credit card or shop for a car loan?

How does your credit score compare?

Right now, the average American consumer has a score above 700, meaning most people are in good shape credit-wise. Still, it’s important to remain up-to-date and aware of your credit score and credit history. If you haven’t checked out your credit score lately, go to AnnualCreditReport.com and pull your report to take a look.

Many people don’t realize you’re entitled by law to review your credit report for free once a year from each of the three major agencies. You can request all three at once or space them out throughout the year to ensure you’re checking in regularly. Experts suggest pulling your report every four months at minimum to stay ahead of irregularities that might indicate identity theft, or incorrect information—if you do find any errors, be sure to dispute them promptly to protect your credit score and history. 

If you’re looking to keep tabs on your credit even more frequently, check out sites like NerdWallet, Credit Karma or WalletHub which help you pull your report more than once a year.

Now what?

Consider capitalizing on this moment and look for ways to take advantage of your new and improved score. Check in with your bank or credit card company to see if you can negotiate a lower interest rate or think about whether it makes sense to refinance your car or home loan to get a better interest rate. Perhaps you’re a renter and you’ve been thinking about moving to a new apartment—now might be the time to put that new score to use and get your application approved.

A few parting words of advice:

  1. Don’t take on more debt if you don’t need to. Just because you can open a third credit card with 0% interest for the first six months, doesn’t mean you should.
  2. Pay off late bills as you’re able to and continue to pay your monthly bills on time. Consider setting up monthly reminders to help you stay on track.
  3. Avoid getting too close to your credit limit. Actively using your credit cards is a good way to keep your score healthy but using too much credit will ultimately tank your score.

Above all, remember: the goal is to maintain your good credit and keep pushing that score higher.

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All the best,

The Emperor Team