They say “until debt do us part.” That is, if you do not maintain a high credit score, or boost up a less-than-stellar rating, you are in for a great woe. Your credit score helps creditors and others predict whether you can pay debt on time. If you are carrying the burden of bad credit scores, you will pay more for credit cards, mortgages, and car loans. Read on to know what you can do to maintain a high score.
Applying for too many credit cards means you have difficulty managing debt, making credit scores drop. Having too many cards is not advisable, even if they contain zero balances. If you have multiple credit card accounts, it could send a red signal to potential creditors who may doubt your capability to pay. They may create scenarios, like in case you give in to temptation and max out all your cards. This will do damage to your credit report. We have many more Credit Score Building Articles Now Available.
Another advice is to try to avoid reaching the credit limit as much as possible. This will have a bad effect on your credit score. For instance, if you own a credit card with a $1000 limit, do not spend $600 or more on it. Maintain a healthy debt to credit ratio. If not, creditors will see you as a credit risk since – you will give them an impression that you are regularly maxing out all your credit cards.
Maintain credit scores by paying more than the minimum balance on your cards regularly and on time. Remember, credit cards are not some kind of a supplemental income. They are basically for your convenience and you should pay them completely at the end of each month. It is not advisable to pay only the minimum payment since the interest you owe keeps piling up.
In case you pay online using a bank account, factor in the date and time of payment to wire the money to the credit firm before the due date. Making late payments, even for a day, will reflect negatively on your score. You must also make payments regularly. Missing one every second month means a spotty credit score, which makes it more difficult to negotiate better deals on your future account and loan application.
Overall, if you are planning to secure a car or house loan, strive to have a healthy credit. However, a good score in itself is not the only way to have a good financial health. What is important is that you learn how to make a budget, live within means, and track spending. We have many more Credit Score Building Articles Now Available.