5 Top Tips for Maintaining a Tremendous Credit Score
Maintaining a tremendous credit score is important if you would like to use it for loans or credit cards. If you take the Dave Ramsey approach and only use cash for everything then this may not apply. Realistically, most folks use credit. According to Ray Dalio, the short term and long term credit cycles are how the economy generally grows.
There is lots of stuff you can do to take care of a nice nice credit score once you have it. A good credit score usually means lower interest rates, which means that additional cash in the bank. Your cash. Here are some of our top recommendations for maintaining your credit score:
1. Treat all of your debts equally when it comes time to pay
Your credit score takes into account both revolving debt (credit cards) and tradeline or installment debt (mortgages).
It doesn’t matter what your line of credit is, if it has a lower interest rate, you shouldn’t prioritize other loans if it means neglecting that payment. Meaning, don’t skip payments regardless of the interest rate. It’s not a good look. Also, constantly having a balance on your credit cards can lower your score and hurt your chances of getting approved for loans or any other credit card accounts you may want to open.
2. Keep old credit cards open to maintain the longer history
There are a few reasons why keeping old cards open can benefit your credit score, and one is the length of your credit history, which accounts for 10 percent of your score. This is especially important for older credit cards, because they give your credit report a longer record. This is good for you.
3. Consolidate cards to have fewer overall balances
Having a number of small balances spread out over several different cards may seem smart, but this approach can actually backfire if you overuse it. You’re better off paying these amounts down. A good way to improve your credit score is to eliminate small balances. This is because having multiple cards with balances can lower your score rather than boost it.
If you’re looking to pay off credit card debt quickly, consider a balance transfer card to consolidate all your monthly payments onto one card. But only do this once. Many folks get into the bad happing of transferring balances many times, and it’s a bad habit to have.
4. Make sure you pay every bill on time, every time
Your payment history accounts for 35 percent of your credit score. If you have trouble keeping your bills in order and staying organized with payments, set up electronic billing and payment reminders to stay on top of your bills.
If you aren’t good at keeping track of what’s due and when, there are apps and calendars on your phone. Use them. They work.
You can set up auto payment plans through your bank or with your credit card to ensure that bills are paid for you, on time, every month. (We use this tactic personally, and it helps a lot.)
5. Try not to rack up the balance on your credit cards
If you have one credit card with a $1,000 limit and have a $500 balance, your credit utilization ratio is 50 percent. Aim for 30 percent or lower. The people with the best credit scores only use about 18 percent of their available credit.
If you’d like some help with getting your credit score up and your debts in order, please contact our credit repair experts at the Dallas office of Ascension Credit Services
