Helpful Tips and Tricks to Achieving and Maintaining Good Credit
With a bad credit score, it won’t be easy to get an auto loan. Some lenders may approve your auto loan but at a high interest rate. A good credit score can make your financial life easier and also help you save money. Below you will find some tips and tricks to achieving and maintaining a good credit score.
Make a Full Payment or at Least the Minimum
Late or missed payments get reported on your credit report and stay for years, hurting your credit score. You should always strive to make full payment of the amount due on the bill. If that is not possible, you should at least pay the minimum amount specified. However, paying the minimum amount stretches your debt and you also have to pay higher interest on the overdue amount.
Manage Your Debt
Higher debt affects your credit score, so you need to draw up a plan to reduce your debt in a speedy manner. You can start by preparing a budget and cut down your unnecessary expenses. The money you save every month can be used to make larger payments towards your loans and credit card debt.
Keep Old Credit Cards Open
Your length of credit history accounts for 10 percent of your credit score. If you have a short credit history, even a single missed payment can do more damage to the credit score. On the other hand, if you have a longer credit record, the damage to credit score in the case of one missed payment will be less. When you close an old credit card, the credit card account and related credit history is removed from your credit report. This reduces the length of your credit history.
Don’t Allow Your Credit Card Balance to Increase
Credit card balance indicates the amount of credit card debt you have. The higher the credit card balance, the higher the debt. According to credit card experts, you should strive to maintain a 30 percent or lower credit card balance. For example, if the credit card limit is $1,000, the credit card balance should be $300 or less. This will help you achieve and maintain a good credit score.
Pay Your Bills on Time
The most important thing you can do to achieve and maintain a good credit score is paying your bills on time. You should never default on loan repayment or delay credit card bill payment. Make sure you pay all your bills on time every time. You should try to make a full payment towards the credit card bill. Partial payments or minimum payments attract higher interest rates, which leads to an increase in debt and will hurt your score.
Consolidate Credit Card Balances
If you have multiple credit card debts, consider consolidating all your credit card debt into one and strive to make full payments. This way you can get out of debt faster, which will automatically help you achieve and maintain a good credit score.
If you have a bad credit score, you now know what steps you need to take to achieve and maintain a good credit score. Follow the tips and tricks above and you will experience an increase in your score!