Helpful Tips and Tricks to Achieving and Maintaining Good Credit

Helpful Tips and Tricks to Achieving and Maintaining Good Credit

A credit score is an important aspect of your financial life. It is used by lenders as a measure to decide whether or not you qualify for a loan. If you have a bad credit score, a large number of lenders will turn down your loan application or offer them with high interest rates. To make things easy for you, we have compiled a list of a few tips and tricks to achieving and maintaining a good credit score. 

Treat All Debts Equally 

When it comes to repaying debts, you should treat all debts as equal, no matter the amount. Defaulting on a loan payment is not an option if you want to achieve and maintain good credit. Depending on the loan type and creditor, your account can go into default even after missing a single loan repayment. A single loan payment default stays on your credit report for many years and may affect your credit score for a long time. You should treat all debts equally and make all payments on time every time. 

Don’t Close Old Credit Cards

A long credit history plays an important role in your credit score. If you close old credit cards, the account and the payment history is removed from your credit report. The result is that your credit history duration becomes shorter. The length of the credit history accounts for 10 percent of your credit score and you lose this advantage when you close old credit cards. 

Don’t Apply for New Credit Cards and Loans Often

Credit card companies are known to introduce credit cards with exciting benefits to lure customers. When you apply for a new credit card, the credit card company checks your credit score while processing your application. Most credit card companies will approve your credit card application if your credit score is in the range of 700 to 750. Too many credit score inquiries will hurt your credit score. Hence, you should avoid applying for new loans and credit cards often. 

Keep Credit Card Balances Low

The credit card balance refers to the debt or amount you owe to the credit card company. A higher credit card balance means a higher debt which hurts your credit score. If you want to achieve and maintain a good credit score, you should aim for using less than 30 percent of the total credit available to you.

Keep an Eye on Your Credit Report

Your loan repayments, account closures and other financial activity are mentioned in your credit report. However, there can be errors in reporting that will cause your credit score to drop. You need to check your credit report and look for any reporting errors. If you find any, contact the credit bureau and draw their attention to it. You will be required to provide supporting documents to correct financial reporting errors on your credit report. 

A good credit score is a necessity and also something good to feel about. You have to work hard to take your credit score from bad to good but the tips and tricks given above will help you get there.