There are many benefits to getting a good credit, such as enjoying lower interest rates on credit cards and loans.

Good credit score

Good credit score

A good credit score also allows you to save money on insurance and security deposits on new mobile phone services and services. Using credit wisely and responsibly is what helps you maintain a good track record.

Know what goes into a good credit score

The more you know about what goes into your credit score, the easier it will be to maintain a good one. Five key pieces of information are used to calculate your credit score – payment history, debt levels, credit age, loan mix, and recent credit. Some things do not affect your credit score. For example, checking your account overdrafts and utilities will not automatically help (or hurt) your credit score.

Pay your bills on time

Pay your bills on time

This applies to all your accounts, not just your credit cards and loans. Until certain accounts are reported to credit bureaus when you pay on time, they may end up on your credit report if you fall behind. Even a small library in the queue could end up with your credit report if left unpaid and sent to a collection agency. Keep paying all your bills on time to maintain a good credit score.

Keep your credit card balance

The higher the credit card balance relative to your credit limit, the worse the score. Your credit card balance should be within 30 percent of your combined credit limits to maintain a good credit score. That’s $ 300 on credit cards with a combined limit of $ 1,000. Charging more than 30 percent of your credit limit is risky, even if you plan to pay off your balance when your billing statement arrives. Card issuers usually report the balance when your statement closes, so this is a number that will be reflected on your credit report. It’s a good idea to keep tabs on your online accounts and pay enough to reduce your balance to less than 30 percent just before the billing month closes.

Do not close your old credit cards

Do not close your old credit cards

When you close your credit card, the credit card issuer no longer sends corrections to credit bureaus, and the credit scoring formula gives less weight to inactive accounts. After 10 years, the credit bureau will remove the same closed account from your credit report, and losing that credit history will shorten your average credit life and cause your credit score to decline.

Closing a credit card also reduces available credit. For example, if you have three cards with a combined credit limit of $ 10,000 and you close one with a limit of $ 3,000, the combined credit limit will be reduced to $ 7,000. Since your goal is to keep your credit card balance at less than 30 percent of your available credit, closing the card lowers your threshold by $ 900.

Manage your debt

Credit card balances are not the only accounts that affect your credit score. Credit balances and lines of credit also affect your level of debt. Too much debt can cost you points on your credit score. The lower the debt, the easier it will be to maintain a good credit score.

Limit your applications for a new loan

Limit your applications for a new loan

Too many credit questions – whether they are for a credit card or a loan – can also have a negative impact on your score, so make sure you only apply for a loan when really needed. Opening a new credit account also lowers your average credit age.

Watch Your Credit Report

Just because you are doing well with your credit does not mean that everyone else will. Mistakes can end up in a credit report leading to a drop in your credit score. Identity theft and credit card fraud can also lead to inaccurate information about your credit report. Checking your credit report throughout the year helps you to spot these mistakes early in order to correct them and maintain a good credit score.