Maintaining a good credit score has become a necessity for individuals, especially business owners.
A credit score is all that decides how much loan amount you are eligible for in the future.
No matter what kind of loan you go for, bank see your credit score is seen on every loan application you send to the bank or other authorities.
In this piece of the article let’s discuss some of the best ways to maintain credit score.
Why Maintain Good Credit Score?
Loan facilities are available today almost instantly for individuals with a good credit score.
Your loan applications need to be processed instead of being rejected.
Your loan will build needed finance for you and your future.
If you are someone with a low credit score, you are putting yourself in trouble.
None of your loan application will be processed further.
Since rules and regulations related to the loan are strict, a credit score is the key factor that decides your loan eligibility.
Furthermore, your credit score also decides the amount of loan (cash) that you can opt for when you are applying for a loan.
Here is a list of 13 Best Ways to Maintain Credit Score:
Treat Every Debts Equally
One of the best ways to maintain and improve credit score is to treat all your loans and installments equally.
You must pay the installments on time be it for mortgage or credit card.
Even purchase of smartphone on loan can be an impact on your credit score.
Hence, all you need to do is pay installments on time.
Maintain History with Credit Card
Older the credit card and made payments, better the credit score.
Only a handful of people who utilize credit card realize this.
But, when it comes to credit score, there are various things that are taken care of.
Payments you make against the use of credit card set you among good individuals who pay installments in time.
Using Cards with Fewer Balances
More cards with fewer amount will benefit you is a misconception when it comes to credit score.
It doesn’t reflect the image of an organized individual managing the finances.
Hence, this can be a negative impact on your credit score.
It would be better if you go for fewer cards with sufficient amounts.
Pay Bills on Time…Every time!
Paying bills even the utility or telephone bill on time makes absolute sense.
It will keep you away from the burden of paying a lot later.
Moreover, if you are paying bills on time, this will create a good credit score for you.
Remember, there are more things that are involved in deciding the credit score.
Keep in Check the Credit Utilization Ratio
For instance, if your credit card utilization limit is $10,000 and you have spent $5000, your credit utilization is 50%.
Can you believe the fact that people with the best credit scores utilize only 8% of their credit limit?
Yes, initially, you can focus on 30% utilization or even less if possible.
Keep Checking the Credit Report
Not checking the credit report for a long time is a mistake.
Keep checking your credit score on regular intervals so that you can eliminate errors from it.
There are various sources that allow you to check your credit score free of cost.
Keep using them and removing errors from credit reports to maintain good credit score.
Neglect Credits that You Don’t Need
Once you have a good credit score, you will have more loan offers.
It is a fact that you need to take seriously.
When you have offers, doesn’t mean you must accept all of them.
Try to avoid opting for credit when you are actually not in need of.
Pay Minimum, or Pay at Once
In case you have troubles paying back the credit, pay the minimum amount.
On the other hand, if you can pay the entire amount, nothing is better than that.
“People in financial difficulties don’t pay the credit that affects the credit score”
Contact Creditors when Needed
Creditors are human too, in the situation when you are unable to pay the debt, contact them.
Consult them about the issues you are facing and try to locate a solution.
In most cases, you will be able to find an alternative to the problem.
But, if you are unable to do so, negotiate with creditors.
Don’t Forget Your Limits
Your credit limits must be 20% of your total yearly income says 20/20 rule of Wells Fargo.
Taking this rule on a serious note, you will have to face no troubles in future.
Sometimes, with a wide variety of options available, you can go for more than you can pay. Keep your limits in check makes sense.
“Staying in Limits Help You Win in Most Situations”
Make a Budget to Reduce Debt
Utilize your savings to make some payments and clear your debt.
Of course, this will not happen instantly and it will take some extra time to do so.
But, clearing some of your debt can be positive for your credit score.
Shop in 15 days!
30 days of a grace period is available to you when inquiries won’t affect your credit score.
It is a great idea to get all your shopping done in the first two weeks of the month.
it will keep your credit score maintained to a great level.
Yes, there may be some issues that you can never resolve without proper knowledge.
In such a case, you can feel free to connect with banking professionals and others to clear the doubt you have or the error you want to eliminate.
Some Extra Tips
If you wish to find even more ways to improve your credit score then please check out this guide here which contains 101 tips. Some of the points won’t make as much difference as the 13 best practices that we have written about though.
Surround yourself with people who have a higher credit score and learn from them.
These are some basics that can work wonders and provide you with financial freedom in the future or during retirement.
Focus on these terms and make sure you never face troubles due to a low credit score.
Let banks always know that you are good in re-paying the loans and you can make payments in time.