Maintaining a good credit score is of vital importance. Without good credit, it may be very difficult to get a loan at some point if you would like to buy a large ticket item like a car or a house and if you let your score slip too much, it might even be difficult to acquire a basic credit card. For most of us, there are times in life where money is tight and it is difficult to pay the bills, so keeping a good credit score is not always easy, but it is simple thing to do if you know what to do. If you can consistently do these four things, you will have a score to brag about and the banks and credit card companies will be competing for the opportunity to loan you cash.
1. Pay Your Bills On Time
This may seem obvious, but it’s really important to always keep this in mind. Every time you pay a bill late, for instance your phone or cable bill, it may be recorded on your file and factor negatively into your credit score. Even if you forget to pay the bill and end up paying it only a few days or a week late, it can negatively impact your score. Mark it in your calendar or schedule an alert on your phone or however you prefer to do it, but just make sure to have reminders to pay your bills a few days before those bills are due and follow through!
2. Pay Your Credit Card Bills
It’s important state that it’s really important to pay your credit bills and pay them on time, as late or missed payments on a credit card bill ALWAYS factor into your credit score. Besides affecting your credit, you will be charged interest and late fees, so there is the added benefit of immediate savings when you pay the bill on time.
3. Pay More Than The Minimum On Your Credit Card
If you are paying only the minimum on your card each month, that is a bad signal to credit card companies and will also affect your credit negatively. Credit card debt is a bad type of debt because the interest rates are usually relatively high. If you are maintaining a high credit card balance and only paying the minimum each month, it’s an indication that you are struggling to pay your bills. If you do need a long term loan, see if you can get a personal loan from the bank. You will surely save a lot on interest fees over a credit card and as you will see in the next tip, a traditional loan can actually help improve your credit score.
4. Establish Credit History
It might sound counter-intuitive, but having no debt at all is no good for your credit. Ironically, if you have never had any type of loan and have the money to pay for everything with cash, you are not establishing credit history. Should you one day decide you need a loan to purchase a house for example, lenders don’t know if it is a safe bet that you will make your loan payments, because you have never made any loan payments before. If you find yourself in this situation, you may want to consider taking out a small personal loan from your local bank, even if you don’t need it. Make your loan payments on time and you will be rewarded with a healthy credit score that can one day help you if you need something like an auto loan or a mortgage.