Keeping Your Credit Score in Check: A Definitive Guide

With credit cards, you can enjoy the convenience of paying for your purchases over time. This is great if you want to buy something now but do not have cash on hand or need a few extra days to pay. However, it can also be a risky venture.

If you already have several credit cards, consider consolidating them into one so that they will be easier to manage and keep track of – this will help prevent identity theft and fraud as well as reduce the risk of losing important documentation in case one gets lost or stolen. If you want to apply for a loan, lease an apartment, buy insurance or even rent your next car, having a good credit score is important. A bad score could mean paying higher interest rates on loans or being declined when trying to rent an apartment. Therefore, it is important to opt for a credit score check before any big investment.

What is a credit score?

A credit score is a number that represents the likelihood of someone repaying their debts, calculated based on your history with them. Even though many factors determine how responsible you may be in paying off loans or what interest rates are charged to you, it is best not to take any chances as this could mean having no access at all by applicants who refused lending from others because of lower-than-ideal credit ratings.

How to get a good credit score?

No one wants to live with a bad credit score. With so much information on the internet about how to get and keep good credit, it can be hard for people who are new at managing their finances or those that have matured into adulthood later in life than most others. By following these five easy steps you will see your number climb up quickly!

  • Always pay off bills by the due date 
  • Pay more towards high-interest loans first because they cost more in the long run 
  • If making minimum payments is not an option, contact creditors before going underwater
  • Decrease your balance limit immediately
  • Do not use all of your available balance every month

Why you need a good credit score?

You need a good credit score to be able to get loans and make sure that you are not paying exorbitant interest rates. People who had bad scores are unable to purchase anything without being penalized with an astronomical annual percentage rate (APR).

Having a good credit score will help us buy things when needed at reasonable monthly payments or low-interest terms but many times if your score is too low then the company will use what is called “a factor” which means there is no limit on how much more money you will owe each month than your original agreement.

Ways to improve your credit score 

  • Keep your balances low. You should not exceed more than 30% of the maximum amount limit per month.
  • Pay all of your due balance in time. Do not opt for the minimum amount limit. Pay off the entire balance. Paying the minimum amount means you will be charged for the remaining balance. It will cost you more in the long run.
  • Try to use your credit card more. No matter how big or small the payment is, use your card for the purchase. However, make sure you are not buying something that is out of your current limit.

Tips and tricks to maintain your credit score

  • The more you use your credit card, the better will be your credit score. Use your card for every small to big purchases. However, there is a thin line here – make sure to not go over your maximum balance. Determine how much you can afford to pay every month and try to live within the means of that.
  • In order to build your score, you have to make timely payments every month. Your bank account should have enough money in that case. Automate your payment mode so that you do not have to worry or forget about the payments every month. At the same time, you have been sure that your account has enough balance to pay. Budget your monthly expenses and make sure to distribute your money between your checking and savings account accordingly.
  • After taking a loan, you can automate it so that the amount is deducted from your bank account every month. Again, automating your payments would help you simplify your life and build your credit score accordingly. This is not just the case of loans, but also for monthly bill payments and tuition fees if you are in school or college.

Final Take

A high credit score can be rewarding for your wallet and peace of mind. It is important to maintain good habits with your finances to keep a higher credit score, in order to avail any kind of loans or other investments later. Make sure to check your credit scores now and then to have an idea of how to use your card.