In the financial world, your credit score means everything. You use it to apply for loans, credit cards, and other financial products. While your score is not the sole decisive factor in application approvals, it can be a massive advantage if you have a high score. The perks include lower interest rates which can help you save so much.
Maintaining a good credit score may seem difficult, mainly when you are preoccupied with doing other things. Keeping in mind some simple habits, however, will help you achieve such a goal without having to take drastic measures. While taking into account these habits, you can also monitor your credit score through a free credit check tool.
Track All Your Debts
Make sure to record all the debts you may have, whether they may be credit card debts, instalment debts, or any other kind. The critical thing to remember is not to distinguish your debts from each other. That’s because you have to pay them by a specific date to ensure you do not get any penalties.
Even though one debt may seem to have a lower interest rate, you should not set it aside since doing so may cause you to forget about it once payment is due. No matter how small the amount may be, debt is debt, and failure to pay one may negatively affect your credit score.
Keep Low Credit Card Balances
As much as possible, try to keep your credit card balances low for your credit limit. You can keep your credit utilization at a minimum through simple acts like decreasing your spending or paying your balances before your issuer reports your balances. It is best to keep your utilization rate to 30% because a percentage higher may indicate more difficulty in paying your bills.
Keeping your credit card balance low will help you maintain a good credit score and prevent you from getting stuck in a mountain of card debt, one of the prevalent problems among users today.
Limit Credit Applications
One thing you must be careful of is applying for credits. Whether it be a loan, credit card, or other product, making too many applications can pose risks to your credit score. Every time you make an application, your score will be lowered temporarily, with the duration depending on the nature of your inquiry. As a result, you should apply for credit only when you need it.
Before applying for a new credit card or loan, check your score through a free credit check tool. At times, you may be unaware of factors that may affect your credit score and jump into a new application without realizing that doing so might do more harm than good.
Be Careful in Closing Cards
Similar to how you should be careful about opening too many credit lines, you should also be vigilant when it comes to closing your credit cards. If you have had the card for a long time, you may want to consider keeping it since it contains a good history of your financial transactions over the years. This information may be helpful for your credit score, so one option for you is to do smaller operations instead rather than close the card.
Make All of your Payments on Time
One of the best things you can do to keep your credit in check is to pay all of your payments early or, at the very least, on time. The reality is that seeing that you diligently make payments on time over a long period of time shows that you’re a reliable borrower and thus helps your credit score and increases your chances should you want to borrow more or again in the future.
Nowadays, you can also set up preauthorized debits for many bills. Your communications bill is a great example of bills you can set up for prepay, as phone/internet bills arere tracked on your credit report.
Knowing what you owe, making a plan to pay it back and making payments on time are all pieces of the puzzle you need to place to keep your credit score high or work towards getting there. Just remember, these things take time, but with the right planning and determination are completely possible.