Maintaining a good credit score by making wise financial decisions will ensure you can borrow when you need or want to.
Remember that your credit score is only one of many factors, such as employment and income, that a lender will use in deciding whether or not to lend you money.
You can keep a good credit score by making your payments on time and balancing your credit spending.
1.Pay your bills on time, regularly.
This is absolutely essential to better your credit score.
Each late payment dings your credit score and presents a picture of unreliability.
You must determine that, going forward, you will be paying your bills on time.
The biggest chunk of your credit score is based on your payment history.
Never bounce a check.
This along with late payments will stay on your credit report for seven years.
Ask your bank for a small amount of reserve credit that will cover any “insufficient funds.”
Pay at least the minimum amount due each month plus $10.
Make sure the payment arrives at least one day before the due date.
Keep in mind that late medical bills and apartment rent are generally not reported to the credit bureaus (although you do need a place to live).
It’s much easier to keep track of due dates if you pay your bills online through your bank.
Then you can schedule payments for any date even if it’s not due for a few months.
Plus you’ll have written proof that the payment was made on time, and you won’t have to worry about delays in the mail.
2.Reduce your debt to credit ratio.
The next big chunk of your score after your credit history is determined by the balance on your available credit.
Seek to keep your balance for each card at approximately 30 percent of the limit, or less.
This means that if your credit card limit is $1000, you should aim at having a balance of not more than $300.
Ask for an increase in your credit limit for the cards you currently have if you have used over 30% of the current limit.
But don’t spend it!
Having high available debt and low indebtedness helps a lot.
In other words, if you have lots of available credit (credit cards you don’t use), and little or manageable debt, that looks better than being in hock up to your eyeballs, or just having no established credit at all.
If you pay off your credit cards in full anyway, consider paying them off a day or two before the billing cycle is closed (check online or on your statement for the day, and the current total).
That way, your bill will show a very small or even negative amount, which gets reported to the credit scoring institutes.
This increases your credit score up to 50 points (if everything else is unchanged).
3.Resist responding to “pre-approved” credit card offers.
These come by mail or are sent to you online.
It’s easy to think, “What can it hurt to apply? They say I’m already approved.”
The reality is that each time one of the national credit bureaus receives an inquiry from a credit card company, your score goes down a few points.
This includes store card accounts; the less you have, the better.
The fact that frequent checking harms your score also means that you need to avoid checking your score compulsively.
4.Take advantage of 0% interest offers.
Taking advantage of these 0% offers outweighs the disadvantage of the credit card company making an inquiry to the credit bureaus.
- Buy your own home.
Owning a home is viewed as considerably better than renting one.
Although affordability of housing has changed in recent years, owning a home is still within the reach of many who save regularly and spend within their means.
- Avoid moving around a lot.
If you physically reside at the same address for a long time it is better for your credit history than if you move frequently.
- Get married.
If you examine two people with very similar credit histories, the one who is married will have a markedly higher credit score than the single person.
Strange, but true!