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5 ways physicians can protect their credit score

Article

Your credit score matters. That three-digit number assigned to you by credit reporting agencies can affect your career, your ability to borrow money, and your business.

As a physician, you’ve worked hard to earn your credentials, which is why it's important to protect your credit score in order to maximize your ability to thrive as a professional. Here are five tips to keeping your credit score healthy in an uncertain economy.

Tip #1: Make all your payments on time.

Even if you can only afford to pay the minimum amount due, don’t skip it. While it may be a small number, ignoring the payment all together implies that you don’t think paying off the debt is important—and if you get into that habit, it can have some negative lasting effects. Your payment history is the biggest influence on your overall score, at 35%. To ensure you never miss a payment, set up your bills for automatic payments.

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Tip #2: Don’t max out your credit limits.

The amount you owe lenders makes up for 30% of your credit score. This includes your cumulative outstanding balances on things like credit cards, mortgages, and loans. Even if you’re able to comfortably afford to pay off your accounts in full each month, the cumulative balance can potentially indicate to borrowers that you’re overextended.

Tip #3: Keep old accounts open.

Right now might feel like a good time to clean out your wallet, but don’t be quick to close out old credit cards. Even if you haven't used a card in years, it’s good to keep in active status for two reasons. First, it extends the age of your credit history, which makes up 15% of your overall score. Second, it can come in handy should you need to access an extra line of credit, which can serve you well in a time of uncertainty.

Tip #4: Track your score regularly.

Credit scores can change every month. Sign up for a free, reputable service so you can track your progress and be alerted of any changes—both positive and negative—to your score. This will help you stay motivated, identify challenge areas or fraudulent activity on your accounts, and keep your goal top of building your score top of mind.

Tip #5: Consolidate your debt.

It’s a stressful time for everyone right now. As physicians anticipate the return to practicing as usual, there is undoubtedly a lot on their minds. Many of BHG’s physician borrowers are working with us to consolidate their debt. This enables them to pay off some accounts to free up their limits and show their fulfillment of paying back their lenders.

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Protecting your credit score is always important, but especially in an uncertain economy, when you may find that you need to apply for financing right away—and you don’t want to be at a disadvantage because of poor credit.

Remember that your financial health is a key component of your success. Just as you care for patients, take the time to care for yourself financially and position yourself as a more powerful borrower in order to secure the funding you need. When a crisis strikes, you may not have the luxury of time to repair a poor credit score to enhance your profile to a lender, so take proactive measures to keep it healthy.

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Mike Bannon ©CSG Partners
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Gary Price, MD, MBA
Claire Ernst, JD, gives expert advice
Claire Ernst, JD, gives expert advice
Claire Ernst, JD, gives expert advice
Claire Ernst, JD, gives expert advice