Keeping your credit score high is important, because it can save you money in interest. It can also help to get you the best rate when you need to borrow. You can get more financing if you have a high credit score, whether you are looking to buy a car, house or anything else of value.
How to maintain a good credit rating
Many things can be done to keep your credit score high and improve it, such as paying your bills in a timely manner and keeping the balances of your revolving cards low. It is also important to understand your credit rating so that you can fix any issues before they worsen.
The first thing to do is review your credit report from all three of the nationwide consumer reporting agencies (Experian, Equifax and TransUnion). It is important to check your credit scores. 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.
The most important factor for your credit score is your payment history, so make sure you pay all your debts promptly and in full. It is easy to improve your credit score by paying on time and in full. You can do this by setting up automatic payments or by setting up alerts that remind you to pay your bills on time.
The credit utilization rate is an important component of your credit score. It reflects the amount of revolving debt you use. Credit utilization rates should be kept below 30% to let lenders know that you are only using credit necessary for your needs.
Don't open several new credit accounts in a short period of time, as this could look risky to lenders. Opening a lot of accounts can also lower your average account age, which can hurt your credit score.
To limit your usage of revolving cards, maintain a high limit on each card and only use 30 percent of your total credit. This will show credit bureaus you have a mix of different types revolving debt, which is crucial to improving your score.
Your credit score is also affected by the mix of loans you have. 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. You should only charge the card a small amount per month, and make your payments on schedule.
You can also try to move your outstanding debt around by lowering your credit utilization rate and paying off debt on lower-interest accounts before focusing on the higher-interest ones. This will raise your credit score. However, you're better off focusing on debt repayment and reducing your balances.