The way credit scores are calculated is changing this summer, and you need to be prepared.

Millions of Americans will see their scores go down, while millions will see their scores go UP. Which side of the seesaw will you be on?

By preparing now, you can be one of those who are rewarded with a higher score.

A top tier credit score qualifies you for lower interest rates and lower insurance premiums.

Who Will Be Rewarded with Higher Credit Scores?

Consumers who carry low credit card balances will receive a score increase. Paying balances in full when the billing statement comes in will also be rewarded.

Who Will Be Penalized with Lower Credit Scores?

Consumers who carry a high balance-to-available-credit will be penalized. Especially, if they make partial payments and carry a balance from month-to-month. When you can’t pay the balance, it is seen as spending beyond your ability to pay.

The Exception

The balance-to-limit ratio applies to revolving accounts. It does not apply to installment loans (car loans, student loans) or to mortgages.

Action to Take Now

Now is the time to lower your credit card balance-to-limit ratio. It’s also time to take stock of spending and create a budget, as needed.

For more information on achieving a top tier credit score, please see here.