It is vital to maintain a good credit score, especially if you want a credit card or loan anytime in the future. A good score also means lower interest rates, and that, indeed, means more cash in your bank account. There is a bunch of tips that you can follow to maintain a good credit score. We have listed a few below:
- Know what affects your score
The better knowledge you have about maintaining your credit score, the easier it will be to keep a good score. There are a few aspects of a credit score: your debt level, payment history, age of debt, recent credit, and the mix of debt. Many things you may think improve or lower your credit score might have zero impact on it. For instance, checking your overdrafts does not lower your credit score. If you are better aware of the things that actually hamper your score, then you will be able to work towards eliminating them.
- Treat every debt equally
Your credit score is affected by all types of debts—your installment debt or mortgages, credit card or revolving debts, etc. So, regardless of the line of credit and the interest payable on it, you cannot neglect one debt for another. For instance, if your credit report shows a persistent balance on the credit card, then it will lower your credit score. So, treat every debt equally, and get rid of your dues on time.
- Set up payment alerts
You can download an application that sends you an alert every time your bills or payments are due, or even write down the deadlines of the payments in a planner. It is essential to pay your dues on time and consistently. Your payment history has the maximum impact on your credit score. So, if you are consistent with your payments, then your score is bound to rise with time.
- Maintain your credit utilization rate
It is recommended to have your credit utilization rate at 30 percent or lower. Credit utilization is the available credit that you are already using at a given point. Along with the payment history, your credit utilization rate has an impact on your credit score. The best way to keep your rate in check is by ensuring that you pay out your balance in full regularly. Another way to go about it is getting your credit limit increased.
You can practise the above-mentioned tips to have a good credit score. If you keep at it consistently, then your credit score will surely improve.