Having credit is as essential as going on a road trip around the Island with your closest friends: fair and necessary.
Do you want to buy a car, rent your first apartment or finance the phone you've been waiting for? You need good credit, and the higher your score, the better.
Here are some simple tips for keeping your credit in top shape:
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This article is presented by Popular. Learn more on its Mi Futuro page.
Start here1. Keep your payment history at 100%.
Your payment history (payment history) accounts for 35% of your score, the most important factor. Even so, with the rush of everyday life, it's possible to miss a due date by a day or two.
Many financial institutions allow several grace days before reporting negative activity to the credit bureaus (Experian, TransUnion and Equifax). But when a payment is more than 30 days past due, your account can be classified as delinquent (delinquent) on your credit report.
This negative mark or activity can remain on your report for up to seven years and significantly lower your score. That's why paying your bills on time should be a top priority.
One way to accomplish this with almost no effort is by scheduling your payments1 in Mi Banco. Through this tool, Popular lets you automate payments to more than 5,000 merchants so you're always up to date.
2. Use your cards, but watch your balances.
Buying with your credit cards has many advantages: access to exclusive offers, rewards, points accumulation and welcome bonuses. But using your full monthly limit can affect your credit utilization ratio (credit utilization ratio), which accounts for 30% of your score.
To avoid affecting this portion of your credit, it's crucial to keep the balances on your cards and other lines of credit under control.
For example, if your card has a $1,000 limit, your balance should not exceed $300 from month to month.
If possible, pay your statement balance in full every month. That will keep your credit in top shape while saving you money on interest. If you have an account with Popular, activating Mi Banco Alertas2 can help with this. This feature will automatically notify you of transactions on your account, helping you keep track of how much you're spending each month.
3. Make the most of your subscriptions and other non-traditional accounts.
Normally, only credit card accounts, mortgages, student loans and similar accounts are reported to the credit bureaus. Payments you make on water, electricity and phone bills, and your Netflix, Hulu or Max subscriptions, are never reflected.
Services like Experian Boost can help you improve your credit almost instantly, and at no cost, by letting you receive credit for these non-traditional accounts. You can also talk to the owner or manager of your rental agreement about reporting those payments to the credit bureaus to raise your score if you don't have a mortgage. That said, remember to make these payments on time as well.
4. Consolidate your debts.
If your credit is in good shape (670 or higher) and you have several credit cards, you could apply for a personal loan to consolidate your debts.
By consolidating your credit cards, especially store cards, which generally carry very high interest rates, into a personal loan, you not only have the potential to save money on interest but also to get out of debt in two or three years.
5. Monitor your credit.
A recent study4 found that more than a third of consumers have errors on their credit reports. These range from incorrect balances to accounts that don't even belong to the person. Often these errors aren't corrected until the consumer notices them and reports them to the credit bureaus.
This, in turn, can affect your credit. That is why you should monitor your credit frequently, to make sure this does not happen to you.
You can get a free copy of your report from each of the credit agencies by visiting AnnualCreditReport.com.
Although these copies will not show your current score, they will include all your credit accounts and balances. Review them carefully and verify that everything is in order.
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These practices can help you improve your credit day by day. If you are interested in exploring more resources, you can continue browsing the Mi Futuro page.
This article is for informational purposes only and does not represent any endorsement, nor does it offer any guarantee of accuracy or applicability of its content for any particular purpose. Neither Popular nor any of its affiliates, subsidiaries or related companies are or will be responsible for any special, direct or indirect damages resulting from the information contained in this article. If you require any type of advice related to this article, you should seek it from the qualified professional of your choice.
1Service offered by Banco Popular de Puerto Rico. Subject to availability of funds in your account. Certain merchants may take up to five business days to receive payment. Certain restrictions apply.
2SMS Alerts and Notifications is a free service that Banco Popular de Puerto Rico offers its customers. Text message or data overage charges may apply depending on your mobile service plan. Consult your provider for details. Other restrictions may apply. Learn more at https://www.popular.com/mi-banco/online/alertas/
3Personal loans are subject to credit approval. Certain conditions apply. For more information visit https://www.popular.com/prestamos/prestamos-personales/
4Media Room "Consumer Reports Investigation Finds More Than One-Third of Consumers Found Errors in Their Credit Reports," Consumer Reports, June 10, 2021. https://www.consumerreports.org/media-room/press-releases/2021/06/consumer-reports-investigation-finds-more-than-one-third-of-consumers-found-errors-in-their-credit-reports/ (accessed Nov. 7, 2023.)
This content was translated with the assistance of Artificial Intelligence (AI).
