8 Tips on How to Maintain a Good Credit Score

Looking to take out a personal loan but don’t want it to affect your credit score? Here are 8 simple tips on how to maintain a good credit score, regardless!

How does your credit score compare to the average American? The average American FICO credit score reached 704, which has increased over the years. Having a good credit score can help you secure loans, get lower interest rates, or even get a job.

Looking to take out a personal loan but don’t want it to affect your credit score? Here are eight simple tips on how to maintain a good credit score, regardless!

1. Pay Bills on Time

Paying your bills on time is a big part of your credit score. Make sure you stay organized with your bills. You can also sign up for automatic bill pay to ensure you remember.

Even if they are bills that don’t get reported to the credit bureau, such as vendors or even library fines, over time these bills could go to a collections agency, which will then hit your credit report. You can look for apps to help you organize your bill pay, or set up reminders on your calendar if you can’t sign up for auto pay.

Make sure you keep your account information updated. If you move, you don’t want to forget to pay any bills. Getting your bills forwarded takes time.

2. Keep Credit Card Balances Low

Keeping your credit card balances low is always a good idea. When you get close to your card’s limit, this hurts your credit score. Try to keep your balances within 30 percent of all your credit card limits to keep a good score.

The credit card company reports your current statement balance to the bureau. This means you should watch your balance and keep it low before your cycle closes.

3. Avoid Applying for New Credit

If you have several credit inquiries, it can negatively affect your score. It doesn’t matter what type of credit it is. Make sure you only apply for credit when you need it.

Opening a new credit account will decrease your lower credit age average. This also affects your credit. Lenders view a spike of credit inquiries as a sign your economic circumstances have taken a negative turn.

4. Don’t Close Old Credit Cards

When you close a credit card account, it no longer gets weighed in on your credit score. These old accounts are helpful because they help improve your credit history and average credit age.

For example, if your old card had a limit of $5,000 and all your combined cards total $15,000, removing this card decreased your combined limit to $10,000. Your recommended 30 percent balance moves from $4,500 down to $3,000.

The credit bureau will remove your old accounts within ten years anyway. There’s no reason to hurt your score or remove these accounts since they’re paid in full.

5. Consolidate Credit Cards to Have Fewer Balances

You may think it’s a good idea to have small balances over various cards, but it can be a bad thing. You should pay off small balances instead. Having multiple credit cards with balances can actually lower your score.

If you want to consolidate debt, you can transfer balances to one card, so all your monthly payments go to one balance. You can also look into a personal loan to get lower interest rates and also use a different type of credit. Here’s more info on personal loans.

6. Manage Your Credit

You need to learn to manage your credit and debt. Set budgets and make sure you are living within your credit means. Keep track of your spending to see if you need to make any cuts.

You should also have an emergency fund ready. You should keep a savings account or at least 15 percent of your credit available, so you don’t have to borrow more than you feel comfortable with.

Always pay what you owe or at least the minimum payment. Never skip a payment, especially on loans and credit cards. You should always pay down your highest interest accounts first if you have many credit accounts.

7. Know What Goes into a Good Credit Score

To have a good score, you need to know what goes into a good score. This can help you make wise financial decisions. There are five main things that go into your credit score including:

  • Payment history
  • Amount of debt
  • Mix of credit
  • Credit age
  • Recent credit

There are a few things that may not affect your score like account overdrafts. Utilities are also not on your credit score, so if you need to make a choice. However, that doesn’t mean you should pay these accounts because they will go to collections in time.

8. Check Your Credit Report for Errors

Even if you pay on time and manage your credit right, you may have an error on your report bringing down your score. This is why it’s important you check your credit score to make sure your information is correct.

Fraud is out there, and you may not know you are a victim until you check your credit. Checking your credit report will not hurt your score. You are eligible to get a free copy of your credit report each year.

If you find any errors, you can dispute them. Keep an eye on all your old accounts to make sure the balances are still zero.

You can also sign up for credit monitoring services or talk to your credit card companies about credit monitoring. You can sign up to receive alerts for suspicious spending.

How to Maintain a Good Credit Score Thoughts

You work hard for your money. Having a good credit score can help you save money and get loans when you need them. Follow these simple steps, and your credit should stay where you want it to be.

Looking for More Ways to Earn or Save Money?

Now that you know how to maintain a good credit score, you should check out other ways to make your money work for you. Check out our site to learn about ways to make money.

You can also learn ways to avoid losing money such as online scams. You can also learn other life lessons to help you take control of your financial life.