Everyone knows the importance of a good credit score, but some of us still struggle with improving or maintain it. If you want to maintain or improve your credit score, this blog post is for you. Here are five things you can do to help you achieve or sustain your goals.
1. Keep Your Credit Balance Low
To improve your credit score, it is important to keep a low credit card balance. A high balance can result in a low credit card rating. Experts recommend that your balance should remain below 30 % of your credit limit. Although you will likely utilize more than 30% of your limit, be sure to always bring your balance down to 30% or less before your next billing cycle. Having a higher debt rate can hurt your score. It is easier to maintain a good score when you keep a lower balance on your loans and lines of credit.
2. Pay Your Bills on Time
This is one of the key factors to improve your credit score. If you consistently miss your credit cards or loan payments, it will lower your credit score significantly. Keep in mind that your payment history is recorded on your credit report. Scheduling automatic payments can help you tremendously if this is an area you are struggling with.
3. Avoid Closing Old Credit Cards
Once you close a credit card, you lose some valuable credit history. Eventually, the credit bureau will remove the history of that closed account from your credit report. This shortens your average credit age, which in return lowers your credit score. Keeping your old credit cards active gives you more leverage and helps you maintain good credit. An excellent way to keep your cards active is by using them for bills like utilities, phone bills, or any other monthly essential bills that you would otherwise pay with your debit card.
4. Restrict your Credit Applications
Frequently applying for new credit cards or loans will decrease your score. It is important to apply only when it is necessary. A single credit card application can bring your score down by a few points. Someone who constantly applies for new lines of credit comes across as a risky borrower.
5. Keep a Regular Check on Credit Report
Lastly, Human or technical errors are unavoidable at times. Therefore, keeping a thorough check on your credit report is important. Even though you are doing everything right to maintain an excellent score, fraud or identity theft can lead to incorrect information on your credit report.
