It is important to keep your credit score up, as it will save you money on interest. It will also allow you to obtain the lowest rates when you are in need of borrowing. You can get more financing if you have a high credit score, whether you are looking to buy a car, house or anything else of value.
How to keep good credit?
There are many things you can do to improve your credit score and keep it high, including paying bills on time and keeping balances low on revolving accounts. Your credit score can help you spot any problems early and take action before they escalate.
The first thing to do is review your credit report from all three of the nationwide consumer reporting agencies (Experian, Equifax and TransUnion). It is important to check your credit scores. Contact one of the bureaus immediately if you suspect something is wrong or if you believe you are the victim of an identity theft.
Your payment history is the main factor that determines your credit score. Pay your debts as soon as possible and in full. It is easy to improve your credit score by paying on time and in full. Set up automatic payments, or set up alerts to remind yourself to pay your bills.
The credit utilization ratio is also an important factor in your credit rating. It indicates how much credit that you are currently using. Credit utilization rates should be kept below 30% to let lenders know that you are only using credit necessary for your needs.
Avoid opening several new credit account in a short amount of time. Lenders may view this as risky. Opened many accounts can lower the average age of your account, which could hurt your credit score.
To limit your usage of revolving cards, maintain a high limit on each card and only use 30 percent of your total credit. This will show the credit bureaus that you have a healthy mix of different types of revolving credit, which is key to improving your credit score.
Your credit score also depends on a good mix of different loan products. Credit scoring models, which calculate your credit scores, take into consideration your ability to manage different types of loans responsibly. This includes credit cards as well as mortgages and personal loans.
Credit cards can help you build a good score as long as they are used responsibly. Only charge a small sum to the credit card each month. Make all your payments promptly.
You can also move your debt around by lowering the credit utilization rate. Pay off your debts on lower-interested accounts first, before moving on to higher-interested ones. While this can increase your credit score, it is better to pay off your debts and reduce your balances as quickly as you can.