Credit score improvement, starts with budgeting, changing behavior, says counselor

Credit scores are about behavior, but that doesn’t mean you need to be afraid of them.

“It’s a scoring system that helps banks determine how good of a risk you are and are you going to pay back my money,” said financial counselor Chris Burk with Housing and Credit Counseling, Inc. in Topeka. “This score is kind of developed over how you pay your bills, the history of how you make payments and just kind of how you’re handling your money.”

It’s important to improve your track record of paying bills if you want to be more eligible for credit.

“You’ve got to change behavior and you’ve got to play the game correctly,” said Burk. “You have to use credit wisely. You don’t want to be maxing out your credit cards, even if you’re going to make a good, healthy payment at the end of the month, that’s not good. Experts say you should only use about 10% to maybe at the most 20% of your actual credit limit.”

It’s important to start with getting on a budget and saving an emergency fund.

“The majority of us don’t have that $1000 emergency savings set aside for when that car breaks down or whatever they’re putting on the credit card,” said Burk. “These small purchases a person makes on a credit card, then an emergency happens and now they have a huge balance on that credit card, covering that emergency expense. It all kind of ties together hand in hand.”

As you prepare for long-term purchases, you must get short-term spending in check first, so you can show you have the money to put into a mortgage payment or a car payment.