Building and maintaining good credit is essential and it’s doable. A good credit score may increase the likelihood you receive some of the best interest rates on credit products and can help you to achieve your biggest financial goals like starting a business or buying a home.
If you’re worried that your credit score may not be strong but just don’t know where to begin, don’t worry – take action. You can improve and maintain a good credit score as long you follow a few guidelines and put in some time.
Here are a few steps that can help you to improve and maintain a healthy credit score:
Your payment history impacts your credit score because it takes into account whether you make payments on time or late, carry a balance from one month to the next, or if you pay it off in full. Experts say that making payments on time and keeping your balances low are two of the leading factors for building and maintaining good credit.
NEVER MISS A PAYMENT
Be sure that you don’t miss a payment and that you pay on time. This is important not only for improving and maintaining a strong credit score, but also for preventing any late fees and interest from accruing. If happens, your balance continues to grow – even when you’re not spending.
PAY DOWN YOUR BALANCE
How much debt you carry versus the total credit available to you also impacts your credit score. Try to pay any high-interest credit card first and if you can make an additional payment, do so. When you can decrease your credit card balances you not only show potential lenders that you’re financially responsible, but it helps to improve your credit score. If your credit card has rewards, collect those.
STAY BELOW YOUR LIMIT
Keep any credit card balance being carried over to under 30% of the card’s limit. Why? How much of your card’s available credit that you use at any point in time factors into your credit score.
KEEP YOUR SPENDING HABITS IN CHECK
Take a look at when and where you’re spending your hard-earned money. You may discover that using your card for morning lattes or unnecessary online purchases adds up. Try to designate your credit card for emergencies or basic needs like groceries and gas. Also keep an eye out for any fraudulent purchases. If you see anything strange, notify your credit card company immediately.
REVIEW YOUR CREDIT REPORTS
An annual credit report is available from three main credit bureaus – for FREE! Check each to see if there are any errors, and if you see anything that you feel shouldn’t be there, report the issue to your credit card company or lender. Those entities may in turn update your information with the credit bureaus.
Bottom line, taking steps and having good financial habits could make a positive difference in your credit score.
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