Everyone wants a credit score they can truly be proud of. Many who work at improving their credit score, or start out with a strong credit score, are then tasked with maintaining good credit. This can be just as difficult as establishing credit in the first place.
However, there are certain tactics which can help those with good or average credit keep their credit score where they want it to be, and even improve their credit score over time.
The following four rules are fantastic ways to ensure your credit score stays high, allowing you to have financial freedom and not worry about being turned down should you need to apply for a loan.
1. Pay Bills on Time
First and foremost, it is essential that you pay your bills on time in order to maintain your credit score. The number one reason for bad credit is the failure to pay bills in a timely manner. In many cases, the failure to pay bills on time has nothing to do with a poor financial situation. Instead, many who have a bad credit score due to late payments did so out of neglect.
To prevent from paying bills late, find a debt payoff planner, which can help you remember to pay your bills without forgetting to do so.
If you pay a lot of bills, it doesn’t take much to get disorganized. By staying organized you can know exactly when each payment is due, and prevent yourself from falling behind on payments, potentially damaging your credit score as a result.
In fact, paying bills on time should not only help you maintain good credit, but it should also help you slightly raise a good credit score. The better of a track record you have of paying your bills in a timely manner, the more it will reflect on your credit score.
2. Limit Credit Card Use
Another major reason that individuals may see a drop in their credit is that they are simply financially unable to keep up with their credit card use, resulting in late payments and a drop in their credit score.
However, cutting out credit card use altogether is not always a good strategy. In fact, using a credit card strategically is actually a good way to improve your credit score, assuming all payments are made on time. Limit your credit card use to smaller, less frequent purchases, such as filling up a tank of gas or buying groceries.
Also, spending too much on your credit card and coming too close to your credit card limit can negatively affect your credit score even if all of the payments are made on time. Ideally, you should strive to stay around 30% of your credit card limit.
In other words, if your credit card limit is two thousand dollars, try and spend at or less than six hundred dollars. By following the 30% rule, you will be able to provide a safety net against getting in over your head with high-interest rates and minimum payments.
3. Pay The Minimum on Debts
One of the less obvious mistakes that can hurt a credit score, is attempting to cover too much debt in a short period of time.
For individuals who owe various different creditors, it can be easy to become overwhelmed and make one feel as if they need to do everything in their power to climb out of debt as quickly as possible.
However, there is a much simpler solution to paying back debt from multiple creditors, and a strategy that can actually help your credit score.
Instead of making moderate to large payments to several different creditors, make only the minimum payments to all creditors except for the one who you owe the least amount of money. Pay off your smallest debt first and as you eliminate a debt, move on to the next bill. Continue this pattern until you do not have any debt left.
Many who are in debt attempt to pay off the higher sums of debt first, thinking they are more important. However, it is better to show that you can keep up with routine payments, regardless of how small, and eliminate debt over an extended period of time.
Otherwise, you run the risk of becoming overwhelmed and not being able to save money for emergencies. A car breakdown or a medical expense can quickly derail a budget, which can lead to a failure to make payments when an emergency occurs, causing your credit to greatly suffer as a result.
4. Dispute Credit Report Errors
In some cases, a drop in a credit score may not be your fault. It is not uncommon for errors to show up on a credit report, such as a missed payment showing up in error.
Fortunately, however, it is fairly easy to dispute a claim on your credit report and have the error eliminated, especially if you have the appropriate documentation proving that you made consistent payments and the error is not correct according to your financial history.
It can be scary to see a credit score suddenly drop, but if you know that you have done everything right, then there is no need to panic. It is important to find out exactly why a credit score may have dropped and to dispute the cause for the drop in your credit if it is illegitimate.
It does not take long for your credit score to go back up after a dispute has been heard and accepted. However, it is crucial to address it in a timely manner. To avoid any unexpected changes to your credit score, it is important to keep up on bills and address any discrepancies or late notices that you receive from your lender.
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