Here’s everything you need to do to ensure maintaining a good credit
A credit line helps you fund major purchases by making smaller payments over time. These major purchases include buying a house, a car, or financing your education. To qualify for such a service, agencies and banks evaluate a person’s fiscal wellbeing by measuring their credit score.
A credit score depends on several factors such as employment status, payment history, and debt-income ratio. A good credit score will enable you to qualify for more loans with a minimum interest rate.
We have compiled the top 5 Do’s and Don’ts of maintaining a good credit score. This will help you take benefit of better credit and loan programs with lower fees and favorable terms.
Do Verify Statements
- It is crucial to verify your loan and credit statements regularly. This can be done by opting for an email report, sent out every month. This way you can be sure never to have a missed statement. The statement will also list down your recurring and annual charges. If there are any confusions, you must consult the credit agency.
If you notice any errors, you must get them corrected as soon as possible. This is because payment history accounts for 35% of your credit score.
Do Keep Credit Utilization Ratio in Check
- Consider that your credit card has a limit of 3,000US$ and you currently have a balance of US $ 1,500. This means your credit utilization ratio is 50%. This ratio accounts for almost 30% of your overall credit score.
Therefore, it is in your best interest to keep the ratio well below 30%. If possible, you should clear out any outstanding payments. This will improve your credit score quickly.
Do Not Try to Spread Out Payments
- Do not open multiple accounts and spread your balance over them. While this may seem like a smart move, it can turn into quite a hassle. Sometimes, people end up overusing their limits because of a simple calculation error. Other times, they might forget about payment because everything is spread out.
A better alternative is to opt for a Balance Transfer Card. This card works by consolidating all your payments into one single card. Thus, ensuring that you never miss a payment and your credit score remains high.
Do Not Close Old Credit Accounts
- It is a common practice for people to close their old credit accounts. However, this can have a detrimental effect on your credit score. Good credit history affects as much as 15% of your overall score.
Therefore, keeping an old credit account open will positively impact your score by keeping your credit to debt ratio high.
Do Not Ignore Credit Score Report
- There are several agencies and consultancies that offer a free credit score report. If you want to maintain a good credit score, you must consult these agencies and get your annual score report. This will help you understand your current position and let you figure out if you need to take corrective action to improve your score.
If your score is lower than your expectations, you can review your statements for any errors. Fixing them on time will save you from facing denial of credit line in the future.
- One of the best things you can do for yourself is to hire a credit repair company. The credit repair company will offer valuable advice based on their analysis of your credit rating. Even if your current score is good, they will suggest a plan of action to keep it that way.
A good credit repair company such as Credit Repair Today will offer you a free credit score report, comprehensive plans, and a money-back guarantee. You can use their services to maintain and to improve your credit score.