For the most part, everyone knows that having a great credit score is essential. Credit operates as a major deciding factor when it comes to lending. Banks, more often than not, will review your score before deciding to help you finance major purchases. Items like a house or a car fall into this category, as do other types of big loans.
How to Keep Your Credit in Good Condition
Beyond that, good credit will come into play when trying to carry out other tasks like getting a job or renting an apartment. So, it’s important to keep your credit in good shape so that you have the widest array of options open to you. Here are a few tips.
Don’t Delay, But Remember It’s A Process
Even if you’ve already got great credit, managing your credit score can seem like a daunting task. Be that as it may, inaction is one of fastest ways to keep yourself from achieving your goal. You should prepare yourself to make some changes to improve or maintain your credit score. Remember, though, it could take a fair amount of time. Building and maintaining credit is an ongoing process; exercising a measure of patience is key to doing it the right way.
Follow The Cardinal Credit Rules
Some of the most helpful credit tips are the most obvious. You should pay your bills on time, catch up on missed payments, and keep balances low if possible. Let’s take a look at how these and other factors come into play.
Payment History
Did you know that your payment history has the greatest effect on your score? Unfortunately, it’s also one of the harder elements to repair if you’ve gotten behind. It’s advisable to stay on top of this factor early as you can to keep yourself in good shape.
Pay your bills on time, as even missing the mark by a few days can impact your score. When you do miss payments, endeavor to catch up on your accounts as soon as possible. The sooner you “get current” and stay that way, the faster you can bump up your credit score.
If staying up-to-date has been giving you issues, you might need to take action. Contacting your creditors or seeking credit counseling might be fear-inducing, but, it will help you out in the long run. Again, it takes time, but the key is to remain consistent.
How Much You Owe
This factor also has a great deal of sway over your total credit score. Provided you’re disciplined (or lucky enough not to run into unforeseen circumstances), you can keep how much you owe under control with ease. Keep the balances on your credit cards as low as you can, as high debt has a negative impact on your credit score. If you have incurred some debt, pay it down as soon as you can.
Try not to open a bunch of new cards you don’t need. You might think that having a greater total of available credit will improve your credit score. This approach, however, will sometimes backfire and is one you should avoid. Furthermore, try not to close a bunch of cards you aren’t using as a quick-fix. This strategy, more often than not, is ineffective (and therefore one to steer clear of).
A much better strategy is to manage your debt. Have credit, but use it as needed. If you’ve run into some pitfalls in the past, re-establish a good record by opening a new account and making your payments on time.
Avoid Common Pitfalls
There are a few strategies for maintaining your score that sound good but aren’t. Among the pitfalls you should avoid, asking for a lower credit limit is one of the most tempting. It might make sense that having less available to borrow will keep your spending lower, no? While this is true in some cases, if you already owe, your credit utilization ratio will increase. This, in turn, will damage your score, since you are using more of your available credit.
Other common errors include:
- Never using your credit card
- Checking your credit too often
- Opening too many cards at once
- Settling debts improperly
Be sure to weigh your options in scenarios where these errors might seem like a good idea. It will go a long way toward helping you make the right decision. Which leads to our final point.
Keep Yourself Informed
Staying abreast of as much information as you can is paramount. Be sure that you’re aware of your score and how your actions affect it. Also be sure to check out resources like repair.credit to learn more about what you can do to keep your credit healthy.