How To Maintain A Good Credit Score

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There are many advantages to having a good credit score, such as enjoying a lower interest rate on your credit cards and loans. A good credit score can also save you money on insurance and security deposits on new utilities and cell phone service. Having your credit is wise and responsible, which helps you get a good grade.

 

Know what a good credit score is all about

Know what a good credit score is all about

The more you know about what’s going on in your credit score, the easier it will be to keep a good one. Five important pieces of information are used to calculate your credit score payment history, level of debt, credit age, mix of credit and recent credit.

Some things do not affect your credit score. For example current account overdrafts and utility payments will not automatically help (or hurt) your credit score.

 

Pay your bills on time

This applies to all of your bills, not just your credit cards and loans. While certain bills are not reported to the credit bureaus if you pay on time, they could end up on your credit report if you fall behind.

Even a small library could wrap up fine on your credit report if it remains unpaid and sent to a debt collection company. Continue to pay all of your bills on time to get a good credit score.

 

Keep your credit card balances low

Keep your credit card balances low

The higher your credit card balance in relation to your credit limit, the worse your credit score will be. Your combined credit card balances are said to get a good credit score within 30 percent of the combined credit limit. That is $ 300 on credit cards with combined limits of $ 1,000.

Charging more than 30 percent of your credit limit is also risky if you plan to pay off the balance when you eat billing. Card issuers typically report the balance when your statement closes, so that is the number that will be reflected on your credit report. It’s a good idea to keep tabs on your accounts online and pay enough to reduce your balance to less than 30 percent just before the billing month closes.

 

Do not close old credit cards

When you close a credit card, your credit card company no longer sends updates to the credit bureaus and the credit scoring formula puts less emphasis on inactive accounts. After 10 years or so, the credit bureau will remove the closed account history from your credit report, and losing that credit history will shorten your average credit age and cause your credit score to drop.

Closing a credit card also reduces available credit. For example, if you have three cards with a combined credit limit of $ 10,000 and you close one with a $ 3,000 limit, your combined credit limit will be reduced to $ 7,000. Since your goal is to keep your credit card balance at less than 30 percent of the available credit, the card closes by $ 900 your threshold.

 

Manage your debts

Manage your debts

Credit card balances are not the only accounts that affect your credit score. Loan balances and lines of credit also affect your level of debt. Too much debt can cost you points on your credit score. The lower the debt, the easier it will be to get a good credit score.

 

Limit your applications for new loans

Too many credit inquiries – whether they are for a credit card or a loan – can also have a negative impact on your guests, so make sure that you are only applying for a loan when it is really necessary. Opening a new credit account also lowers your average loan age.

 

Watch Your Credit Report

Watch Your Credit Report

Just because you get everything right with your credit doesn’t mean anything else. Mistakes could end on your credit report leading to a drop in your credit score.

Identity theft and credit card fraud can also lead to incorrect information on your credit report. Checking your credit report later in the year will help you spot these errors earlier so you can correct them and maintain a good credit score.


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