Tips to Protect Your Credit Score
Credit card mistakes can be costly, not just in the current moment, but for your future self as well. These mistakes can truly affect your credit score by bringing it down to places where you don’t want it to be. The result of a poor credit score? Trouble getting future loans, buying a house, and financing for a new car.
If you want to keep yourself and your credit score protected, consider the following tips for doing so.
Keep Your Account Balances Low
One of the best ways to protect your credit score is to keep your account balances low. When your credit card account balances get too high, your credit score can drop significantly. This is because lenders will see the high balance as poor credit management.
Lenders find it best if you aim to keep your credit card account balances at one-third of your total available credit or less. Doing so will keep the ratio of your current balance to available balance in a healthy range which will allow for your credit score to stay where it is and perhaps build as well.
If you can keep your credit limit at ten percent or less, then you will see your credit score rise even further.
Keep in mind that keeping a low balance on your credit card accounts makes up thirty percent of your overall credit score.
Make Your Payments On-Time
By making your credit card payments on time, you can watch your credit score increase over time. Making on-time payments accounts for thirty-five percent of your entire credit score which is the highest individual proportional factor that affects your overall credit score.
When you make your payments on time, or early, you will be showing lenders that you can pay back your credit cards quickly which will prove that you are a trustworthy lender.
Since trustworthiness is what makes future lending possible, making your payments on-time will help you to keep your score up so you can engage in those big future investments that you have in mind.
Don’t Open Too Many New Accounts
Be careful in opening too many credit card account at one time as this can negatively impact your credit score. Each time you open a new line of credit, whether it is a credit card, a loan, etc., there is a pull on your credit which will knock your credit score down.
When you open too many of these accounts too close to one another, you could see your credit score plummet. The bottom line is to be smart in opening too many lines of credit.
Check Your Credit Report
Lastly, it is imperative that you check your credit report. You can do so at least once every year because the three major credit bureaus (TransUnion, Equifax, and Experian) are each bound to provide you a free credit report copy annually. This will help you to see where your credit stands and will give you the opportunity to see what you can do to make it better.
With these tips, you will be able to watch your credit score increase. With a higher score, you will be a better position to start making those big purchases you are interested in.