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 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.
It is important to review all three consumer reporting agencies in the United States (Experian Equifax TransUnion). By checking your credit reports, you can gain a better understanding of your score. If you see something suspicious or believe that you have been the victim of identity fraud, contact a bureau immediately to correct any incorrect information.
The most important factor for your credit score is your payment history, so make sure you pay all your debts promptly and in full. This is an easy way to improve your score. You can achieve this by setting automatic payments or setting alerts that remind your to pay on time.
Credit utilization rate is another important part of your credit score, and it reflects how much revolving credit you are using. It's typically best to keep your credit utilization rate under 30% so lenders know you're only using the amount of credit that's necessary for your expenses.
Do not open multiple credit accounts within a short time period. This may appear to be risky for lenders. A lot of new accounts will also reduce your average account age which can affect your credit score.
You can limit the use of revolving debt by maintaining a credit limit of at least 30% on your cards. This will show credit bureaus you have a mix of different types revolving debt, which is crucial to improving your score.
A good mix of loan products is another key factor in your credit score. The models used to calculate your credit score take into account that you can responsibly manage different kinds of loans - from personal loans to mortgages.
Getting a credit card can be an easy way to build up a good credit score, as long as you are responsible with it and use it only sparingly. Charge a minimal amount each month to your card and pay all of the bills on time.
You can try to move debt around as well by lowering credit utilization rates and paying down debts first on accounts with lower interest rates before moving on higher-interest rate accounts. This strategy can help you improve your score. But it's better to pay down your debt and get your balances low as soon as possible.