Good Habits for a Good Credit Score

Maintaining a good credit score is important for many reasons. A high credit score means you’re a low-risk borrower, which could lead to lower interest rates on loans and mortgages. A good credit score can also help you get approved for a rental property or a cell phone plan. And finally, having a good credit score is essential if you ever need to borrow money in a hurry. Fortunately, there are several things you can do to maintain a good credit score. Here are four habits to start practicing today.

Just because you have a good credit score doesn’t mean you can stop caring for it. Your credit score is like your weight; it generally goes up or down based on your recent activities.

It may come as a surprise to learn that owing money might actually help you improve and maintain your credit score. Demonstrating that you can pay back a mortgage, automobile loan, or credit card on time suggests to lenders that you’re a safer credit risk, which means they’re less likely to default if they give you a loan.

Naturally, lenders will want to see that you’re making steady progress toward paying off your debts. Making regular payments on time for a long-term obligation like a mortgage is only one way to show this, but making additional payments toward your shorter-term debts like personal loans or credit cards can demonstrate that you’re working hard to avoid financial distress.

If you apply for credit responsibly, a good credit score most often indicates that you’re managing your money well. But if your personal circumstances change, such as if your family grows or you need to include car repairs or medical expenses to your spending plan, applying for additional credit may be required.

Before applying for a credit product, you should carefully analyze your alternatives to ensure that you’re receiving the best credit option for your financial status. If your credit file reveals that you’ve applied for several loans in a short period of time, lenders may perceive you as being cash-strapped, which can result in rejected applications and lower credit scores.

Similarly, if you apply for too much credit relative to your household income, you may be a risky loan prospect for a lender since you’ll have trouble paying off your numerous obligations. If you want to apply for credit, first consider paying off any outstanding loans or lowering the credit card limit.

It’s crucial to stay on top of your loan payments. And we’re not just talking about big life events like buying a house or taking out a car loan. Even day-to-day things like utility bills can have an impact on your credit score if you’re not careful. If you let any bill fall more than 14 days overdue, it’ll be recorded in your credit report and remain there for two years—which could majorly affect your ability to take out loans in the future. So if you’ve got some catching up to do, better hop to it!

If you’re 60 days or more past-due on any payments to a creditor, telco, or utility company owed of more than $150, they can record a default on your credit file. This negative mark stays visible for five years and will have significant consequences for your credit score during that time.

People with bad credit may benefit from keeping up with their bills. A thorough credit history includes a consistent pattern of good credit behavior (such as paying bills on time and repaying loans) that can help to rebuild your credit score over time, thanks to comprehensive reporting.

Make sure to keep an eye on your credit report, since what appears there might surprise you. It may not all be correct, and banks or finance companies may make mistakes. You could be a victim of fraud or identity theft without realizing it. Errors in your credit report can damage your credit score, and you won’t know why until it’s too late.

If you have found yourself in a situation where you have a low credit score, and are unable to obtain finance, then the experts at Clear Credit Solutions can help. We are able to remove bad credit from your file, such as defaults, court judgements and fraudulent enquiries. This will improve your credit score and give you a good chance of obtaining finance in the future. Have you tried our services before? Get in touch with us today to find out more about how we can help to clear credit history and help you obtain the finance that you need.