Maintaining a high credit score is essential, as you can save money on interest. And, it can also help you get the best rates when you do need to borrow. When you want to buy something big, like a car or home, a strong score can make it easier to get financing.
How to keep good credit?
You can improve your credit rating by paying your bills on time, and maintaining low balances on revolving account. It's also important to know what your credit score is, so you can spot potential problems and resolve them before they cause issues in the future.
The first thing to do is review your credit report from all three of the nationwide consumer reporting agencies (Experian, Equifax and TransUnion). Checking your credit reports can give you a clearer picture of where your score stands. If something seems suspicious, or you think you may be the victim of identity theft, contact one of the bureaus right away and get that information corrected.
Your payment history is the main factor that determines your credit score. Pay your debts as soon as possible and in full. This is one of the easiest ways to boost your credit score. You can achieve this by setting automatic payments or setting alerts that remind your to pay on time.
Credit utilization rate also plays a major role in your credit score. This reflects how you use revolving credits. Keep your credit utilization under 30%, so that lenders can be sure you only use the credit needed to cover your expenses.
It's best to avoid opening multiple new credit accounts at once, as it could appear risky to lenders. The average age of the accounts you open can be lowered, which will affect your credit rating.
Use only 30% of all available credit when using revolving loans. This will help you to improve your credit rating by showing the credit bureaus a good mix of revolving credits.
A good mix of loan products is another key factor in your credit score. 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 are a great way to improve your credit score. Just make sure you use them sparingly and responsibly. Charge a minimal amount each month to your card and pay all of the bills on time.
You can also shift your debt around if you lower your credit utilization ratio and pay off the debt on lower interest accounts before focusing your attention on the high-interest ones. This can raise your overall score, but it's a better strategy to focus on paying off debt and getting your balances down as soon as possible.