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Tips To Maintain A Good Credit Score
A good credit score is more beneficial than having a poorly rated one. When you are seeking an insurance cover, some companies will want to see your credit score to determine how much premium you pay for the cover. What determines your credit score is how you use your credit. So, what are the ways you can maintain a good credit score?
What Helps in Having a Good Credit Score?
First, you need to know the things that contribute towards making your credit score. Your level of debt is among the things that affect your score. Also, your payment history, credit age, credit mix, and recent credit affect the score. Once you know what makes up the score, it’s easier to make the necessary changes to avoid hurting your score.
Treat All Debts Equally
The credit rating companies take into account your payment history. Avoid prioritizing debt but instead, pay equally. This means that you should pay credit cards alone and default in mortgage repayment.
Ensure that you pay your loans as required as the score will consider all debt. If you fail to pay some of them, your credit score is affected which could ruin your chances of getting future loans.
Reduce Applying for New Credit
Whenever you seek out any loan, the prospective lender will make an inquiry of your credit history. Too many of these inquiries will eventually affect your score negatively. Limit yourself when applying for credit, whether a new credit card or loan. Once you open a new credit account, it will lower the average credit age which affects your credit score.
Pay your Bills on Time
As mentioned, your payment history affects your score. It accounts for about 35% of your credit score. Paying your bills on time helps you avoid a bad credit rating. Sometimes, you may be too swamped up with work such that you forget to pay some of the bills.
Take a record of everything you need to pay monthly and when it’s supposed to be paid to avoid such incidences. Also, if it’s difficult to keep track of everything, set up payment reminders or look for apps that will make payment more manageable. You can liaise with your bank and set automatic payments to ensure that you don’t miss out on payment.
Maintain your Credit Card Balance on the Higher Side
Take for example, if you have a credit card limit of $2,000, and you have a balance of $1,000, when calculating your credit utilization ratio, it will be 50%. It’s recommended that you try and aim for 30% or below.
Most people, who have good scores, use less than 30% as it is also a determinant of your score. When your statement closes, credit card issuers always report your balance which will be the amount that will reflect on your annual credit report. Always ensure that before the billing month closes, you maintain the 30% rule.
Monitor your Credit Report
Whether you watch your balances or make timely payments, it’s important to keep tabs with your credit report. Identity theft can lead to having inaccurate information on your report which lowers your score significantly.
Always analyze it frequently so that you can rectify for a better score. Credit repair companies can also help in helping you with your credit score. Click here for more information https://creditrepaircompanies.com/creditrepair-com/.
A good credit score gives you access to loans. Most financial institutions, before issuing out a loan will always look at your score to determine your payment history. If you have a record of not paying, there’s a likelihood that you won’t qualify.