How to Ensure Your Credit Score Stays Good

Your credit score affects many areas of your financial life – it is the one thing that’s checked by almost all financial institutions including credit card companies, lenders, and insurance firms. And, that’s why it’s important to maintain a good credit score. 

Improving your credit score can help you obtain a lower interest rate on your credit cards and loans, get offered better insurance premiums, get approved to rent premium houses and apartments, etc. Here, we take a look at a few things that can improve your credit score.

Pay Your Bills on Time

Make it a point to pay all your bills, however small, on time. While some bills don’t get reported to the credit bureaus when they are paid on time, they could reflect on your report if you fail to make the payment.

Maintain a Low Credit Card Balance

The higher your credit card balance is, the lower your credit score is likely to be. Your total credit card balances should ideally be within 30% of your total credit limit to maintain a good credit score.

Do Not Close Old Credit Cards

Closing your credit card reduces your available credit limit. For instance, if you have three cards with a combined limit of $15,000 and you close one with a $5,000 limit, your combined credit limit will be reduced to $10,000. But, if you tend to overspend and accumulate debts on your credit cards, go ahead and close your account since it will likely work out better for you in the long run. 

Manage Your Debt Well

Loan balances and lines of credit also affect your debt level. Having too much debt can cause your credit score to decrease. If you currently have too many debts, consider paying off at least the high-interest ones. 

Do Not Make Too Many Applications for New Credit

Too many credit inquiries – either for a credit card or a loan can lower your credit score. So, resist the temptation to apply for a card or loan each time you come across an interesting offer. 

Check Your Credit Report

Make it a habit to thoroughly check your credit report a few times every year to detect cases of identity theft or credit card fraud. You can then correct mistakes like these if any, and push your credit score up.