How to Maintain Good Credit
- April 23, 2019
- By Admin: Jamey Konicki
As financial literacy is only recently begin taught in schools, most individuals aren’t aware of the importance of good credit – until they need to use it. Your credit is essentially a financial report card that lets lenders and service providers know just how good you are with managing your money. When consumers try to apply for a mortgage, car loan, credit card, and even utility services, if they haven’t managed their credit wisely, chances are they’ll be denied or have to pay a higher price.
So, how does one maintain good credit? Believe it or not, it’s not as complicated as you might think:
Education is often the best tool for mastering things. The same is true for your credit. If you have no idea what credit is, what it’s used for, and what factors cause it to increase or decrease, you’ll continually make mistakes. Start doing some research on credit and apply what you’ve learned to your financial habits.
Watch the New Accounts
When your credit is good or you have a personal need it can be tempting to hop online or head to the nearest bank to apply for credit or loan opportunities. The only problem with this is that every time you put in an application the service provider must do a credit inquiry which lowers your score. Not to mention the age of the accounts also have an impact on your credit. That’s why it’s best to keep new applications to a minimum. If you’re in need of money, look to financial solutions like installment loans for bad credit. These types of loans don’t require a credit check, and therefore, won’t impact you negatively (unless, of course, you don’t repay the loan).
Keep Your Balances Low
Though there are times when you may need to make a large credit card transaction to get by, having accounts with high balances in relation to their limits is terrible for your credit. The higher the balances are, the less likely you are to pay them down in a timely fashion which is a red flag for creditors and service providers. It is recommended that you try to use no more than 30 percent of the card’s limit each month.
Monitor Your Credit
Most people forget this very important tip for maintaining good credit. Monitoring your credit history is extremely important. Even if you believe you’re doing a good job with managing things, taking a look once every few months could make a difference. All too often consumers look at their reports and find errors that are bringing their score and reputations down. These errors can sit on your report for months or even years and become harder to dispute with time. This is why it’s so important to periodically check all three of your credit reports.
If you don’t know by now, having good credit is the key to life. These days your credit rating matters for everything from buying a new house or car to determining how much you’ll pay for insurance or a cell phone. If you’d like to be able to access new accounts and services when you need them and save as much money as you can along the way, it is imperative to begin managing your credit accordingly.