Having a good credit score is imperative in the world we live in. You need good credit for getting a car loan, buying a home, prospective employers sometimes look at your credit history, and even renting homes on occasions require a credit check. I am going to share how to keep a healthy credit score, so you can maintain all the hard work you put into getting your credit store up!
Maintaining a healthy credit score is pretty easy to do, you just need to follow these simple ways below, to really keep that three-digit number in a good range. Below is a rough guide to help direct you in what you should and shouldn’t do to keep that credit score. If your score drops don’t worry, with a little work you can get it brought back up.
Maintaining A Healthy Credit Score
Credit limits, debt, payment history are what contribute to your credit report. Bills you didn’t pay last year, have consequences to your low credit score. A credit score includes payment history (35%), new credit (10%), length of credit (15%), the amount owed (30%), and types of credit used (10%). That is a rough guideline to see how they come up with your credit score.
Track Credit Score
Make sure to look over your credit score regularly to make sure there are no mistakes or errors, no past due bills get added, and so on. You can use sites like Credit Karma, Credit Tracker from Capital One, or any other site. If you find an error on one of your reports, you need to dispute it. Under the Fair Credit Reporting Act, you can have these errors investigated within 30 days, and get them corrected. If you miss that error in that time frame, it can take a long time to get it resolved, resulting in a potential dip in your score.
Credit Card Balance Low
Make sure you keep your credit card balance around the 30% or under mark on your credit limit. This will help maintain your good credit score. If you go much higher it will begin to drop your credit score, it shows you are not living within your means. So say you have a $1,000 credit limit, that means you can spend $300 on that credit card to reach that 30% ratio. When you go over that, it can be harder to pay off those balances, and then slowly decline your score.
Pay Bills On-Time
Payment history is a big factor when it comes to your credit score. You want to make sure you pay your bills on-time each month. If you fall behind, it can begin to leave negative effects on your credit score, and that can last for up to seven years. So try to avoid it and don’t get in a slump.
Don’t Close Old Credit Cards
After you have paid off an outstanding balance, try not to cut the card and close that account. Credit scores look at the credit history, and how long you have maintained accounts. So once you get your accounts in good standing you want to keep them open as long as possible to show you are reliable and have a long-standing relationship. Maintaining good credit is a marathon, not a sprint, you just have to be patient.
Don’t Open to Many Credit Cards
Try not to have too many credit cards, that is a red flag to a lot of lenders. It can also pull your credit score down and hurt you. Only have one or two credit cards, that like above you keep below that 30% range.
Limit Applying For Credit
Each time you apply for a credit card or loan your credit score takes a little hit. It is considered a credit inquiry and after so many hits, it can begin to hurt. Try to make sure not to apply for too many cards or loans close together or you will see a good dip in your score.
Don’t Borrow More Than You Can Pay
Make sure that you are aware of your finances. Don’t buy a home and take out a mortgage and realize you can’t pay for it. Do some budgeting and try not to exceed 28% of your monthly income on money you borrowed. It can become very hard to pay back, and create more debt possibly.