Good credit is one of the most critical concerns when planning your financial future, but the rules for maintaining and increasing credit scores aren’t always clear. Use the following tips to help keep your scores looking their best.
1. Stay Current - Making payments on time is one of the best things you can do for your credit; even one or two late payments can result in a major ding to your score. Setting up automatic payments for credit cards and other bills can help prevent accidental oversights.
2. Ask for Help - If something does slip through the cracks, many lenders will forgive a single late payment if you ask and have a good payment history. The sooner you contact them the better, since it’s a much easier fix before the late payment is reported to the credit bureaus.
3. Beware of New Accounts - New credit accounts usually require a hard credit check before approval, and these checks have the potential to negatively affect your scores. Try to avoid taking on new debt during high-risk periods such as a new home purchase, and make sure to use one of the many free soft-inquiry services when checking your own scores.
4. Pay Smarter - It’s good to have a diverse mix of credit types, but revolving debts like credit cards have a larger effect on your overall credit health than fixed installment debts such as loans, and they often carry higher interest rates as well. If you’re able to pay of a chunk of debt all at once, be strategic in considering where to start.
5. Stay Open - Closing old, out-of-use accounts can seem like a responsible move, but it can actually shorten your credit history and consequentially hurt your score. Keep your credit accounts open and in good standing to show consistent, healthy and long-term credit management.
Well-maintained credit scores will keep you on track for all of your financial goals, including major purchases like a new home.