Most Americans Are Working on Their Credit Score – Are You?

Credit score
Are you working on your credit score?
Image by Annie Spratt via Unsplash

 

Your credit score is important to optimize your financial opportunities. That three-digit number can determine whether you can buy a home, get a reasonable rate on a vehicle loan, or land your dream job. Given how important your credit score is, it should be something you’re constantly working to improve and maintain, but are you? 

A new survey from credit card issuer Discover offered insights into how Americans are managing their credit scores

Breakdowns from the Discover data

How many are working on their credit score

  • 61% of consumers are grooming their credit score
  • 83% of Millennials are working on their credit score
  • 66% of Gen Xers are trying to improve their score
  • 34% of Boomers are busy improving their credit score
  • 87% of the youngest group surveyed (18-21) are most devoted to the task

Awareness of credit scores

  • 85% of Americans know their credit score (up from 73% last year)
  • 91% of Baby Boomers know their credit score
  • 86% of GenX know theirs
  • 77% of Millennials are aware of their credit score

Frequency of credit score checks

  • 82% of US consumers check their credit score once a year
  • 70% of Millennials check their score once or more each year
  • 67% of Generation X check it at least every 12 months
  • 61% of Baby Boomers do credit checks annually or more often

Conclusions from the survey

The takeaways from the Discover card survey are that Americans overall are more aware of their credit scores than in past years. Millennials, in particular, are intent on improving their credit scores and monitor it frequently. Their scores are lower than GenX or Baby Boomers, but the younger demographic seems most committed to improving their credit score. 

Why check your credit score?

Knowing your credit score and what’s on your credit report is the foundation for any effort to improve your score. You must know where you are to plan where to go next. In addition to working on improving your credit, checking your report regularly allows you to recognize if you’ve been hit by identity fraud or there are errors on your report lowering your score.

How to boost your credit score

To improve your credit score, you first need to know where the weaknesses lie. There are five factors influencing credit score algorithms: payment history, credit utilization, credit history length, mix of credit, and new credit all factor into the calculation. Here are some areas of concern for each of these.

  • Payment history – Have you missed any payments? If so, but you only missed one, you might be able to get the creditor to give you a fresh start and remove it from your report. That can be an instant lift.
  • Utilization – The total of your balances divided by your total credit lines is how this is calculated. Paying down balances or requesting credit line increases can improve this factor and your score overall.
  • Average age of credit – Keeping old accounts open and not opening too many new ones will keep this portion of your credit score higher.
  • Mix of credit – Having a blend of types of credit can boost this factor. Credit cards and store cards represent revolving credit while car loans, student loans, and mortgages are installment loans. 
  • New credit – Occasionally opening new credit accounts will boost your score but opening too many can drop it so this is a point that can be difficult to master. 

One best practice to get and keep a good credit score is to always make your payments on time. All things being equal, if you must run late on a bill, paying late on one that does NOT report to the credit bureaus monthly will better protect your score. 

Also, paying off your balances in full and never carrying any money on your credit card month-to-month can prevent you from getting in over your head and dropping your credit score. 


To find out more about boosting your credit score, check out Credit Score Keys now. 

 

Resource:

Discover survey data

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