In the financial world, your credit score means everything. You use it to apply for loans, credit cards, and other financial products. While your score is not the sole decisive factor of application approvals, it can be a massive advantage if you have a high score. The perks include getting lower interest rates and cost savings on insurance plans, both of which can help you save on so much.
It may seem difficult to maintain a good credit score, mainly when you are preoccupied with doing other things. Keeping in mind some simple habits, however, will help you achieve such a goal without having to take drastic measures. While taking into account these habits, you can also monitor your credit score through a free credit check tool.
Track All Your Debts
Make sure to record all the debts you may have, whether they may be credit card debts, instalment debts, or any other kind. The critical thing to remember is not to distinguish your debts from each other. That’s because you have to pay them by a specific date to ensure you do not get any penalties.
Even though one debt may seem to have a lower interest rate, you should not set it aside since doing so may cause you to forget about it once payment is due. No matter how small the amount may be, debt is debt, and failure to pay one may negatively affect your credit score.
Keep Low Credit Card Balances
As much as possible, try to keep your credit card balances low for your credit limit. It is best to keep your utilization rate to 30%, because a percentage higher may indicate more difficulty in paying your bills. Through simple acts like decreasing your spending or paying your balances before your issuer reports your balances, you can keep your credit utilization at a minimum.
Keeping your credit card balance low will not only help you maintain a good credit score but also prevent you from getting stuck in a mountain of card debt, one of the prevalent problems among users today.
Limit Credit Applications
One of the things you have to be careful of is applying for credits. Whether it be a loan, credit card, or other product, making too many applications can pose risks to your credit score. Every time you make an application, your score will be lowered temporarily, with the duration depending on the nature of your inquiry. As a result, you should apply for credit only when you need it.
Before you apply for a new credit card or loan, start by checking your score through a free credit check tool. At times, you may be unaware of factors that may affect your credit score and jump into a new application without realizing that doing so might do more harm than good.
Be Careful in Closing Cards
Similar to how you should be careful about opening too many credit lines, you should also be vigilant when it comes to closing your credit cards. If you have had the card for a long time, you may want to consider keeping it since it contains a good history of your financial transactions over the years. This information may be helpful for your credit score, so one option for you is to do smaller operations instead rather than close the card.