As a medical professional, it’s important to keep up with your finances, especially in the pediatric field. One way to ensure you are in good financial standing is to have a good credit score. Whether you are looking to start building credit, it’s always good to try to make your credit score better. To help you do that, here is our doctor’s guide to increasing your credit score.
Understand Your Credit Score
Before you can start increasing your credit score, it helps to understand the ins and outs of a credit score.
Your credit score is a number between 300 and 850 that determines your creditworthiness. This means it’s a number that determines how reliable you will be when paying back a loan. The higher your score, the more likely you are to make your loan payments on time.
Your credit score is determined by your prior credit history as well as any loans you may have and how timely you make your credit payments. Your credit score can also affect the interest rates of your loans. The higher your score, the easier it can be to open lines of credit at better rates.
As you go along in your career, you may want to make large purchases like a home or car. When you decide to make these purchases you will need a credit score to determine what type of loan and interest rate you can get.
Physician salaries vary greatly from role to role. If you are living on a pediatrician salary you may be more inclined to take out loans for large purchases. This is why it’s important to understand your credit score and how it can help you obtain the loans you may need.
What Affects Your Credit Score
There are a couple of main factors that will affect your credit score. The most influential is your credit history. While it may seem counterintuitive to have a credit history to build more credit, it is a factor that will determine how likely you are to build your credit. So if you are a physician, it is in your best interest to start building your credit as early as an undergrad. Here are some of the factors that affect your credit score.
Payment History
Your payment history is how often you pay your credit bills on time. One late payment can affect your entire score. It’s important to make sure you are always paying your bills on time. A great way to do this is to set up automatic payments for your credit cards or loans so you never have to worry about missing a payment.
Credit History Age
Credit age looks at your oldest credit account and the average age of all of your credit accounts. If you have an older credit history, you will seem more reliable and build a history of taking care of your credit and making payments on time.
Types of Credit
There are different types of credit and having multiple can affect your credit score. Some lines of credit have recurring fixed payments like loans and mortgages. Other types of credits may have variable interest rates or payment amounts that you have to be more on top of to pay on time. Having different types of credit can show accounts that you have experience with making multiple types of payments and are responsible for keeping up with all of them.
Credit Inquiries or New Accounts
Every time you have to get a credit check or open a new account, it can affect your credit score. Multiple inquiries from lenders within a year can negatively affect your credit score but one or two is average.
Tips to Help Build Your Credit Score
Building your credit score takes time and effort but here are some tips that can help you build your credit score.
Start Early
To give yourself the best chance of increasing your credit score, make sure you start opening lines of credit sooner rather than later. If you don’t have a credit history to open a line of credit, you can look into getting a secured credit card. This is a card that is backed by a cash deposit and allows you to start building credit. You can also become an authorized user on a friend or family account if you are starting your credit journey in undergrad.
Pay Your Bills On Time
While this may sound like a no-brainer, it is imperative to pay your credit card bills on time to build your credit score. Bills you must pay on time also include any student loans you have, and as a physician, you may have multiple. Paying them on time consistently will help improve your score.
Conclusion
Improving your credit score is a slow and steady process. As long as you make sure you start early, make your payments on time, and don’t open unnecessary accounts, you can see a steady increase in your score.
