The benefits of having an impressive credit score are numerous. It eases a lot of financial pressure and ensures a happier life and easier access to financial aids.
Individuals with good credit scores enjoy low interest rates on obtained loans and credit cards as well as save funds on insurance and securities on new utilities and mobile phone services.
Keeping or sustaining an impressive credit score depends on how well you manage your finances.
Below are a few tips that will help you maintain that impressive credit score:
Understand what is required to have a good credit score
The better the understanding you have of what it takes to have an impressive credit score, the easier it is managing such. FICO, the company renowned for its efficiency in calculating a credit score, have outlined five factors that ultimately affect credit score and these are; payment history, level of debt, account age, credit mix and new credit.
Keep a low credit card balance
A bad credit score is the reflection of a high credit card balance. Your balance, when subtracted from your credit card limit, leaves the available credit. A healthy credit card balance is often pegged at 30% of your maximum credit. Once your balance has gone beyond 30% of your maximum credit, it puts your credit score at a risk even if you intend refunding the balance when your credit report comes.
Credit card issuing companies often make a credit report at the end of every credit statement, and if you have a high balance, your credit score will be affected negatively even after an eventual payoff.
Pay your bills promptly
Your loans, credit card bills and every other bill should be paid on time. Credit-issuing companies are more confident dealing with customers who pay their bills on time. If you want to sustain that impressive credit score, you should continue to pay your bills on time no matter how unimportant you might think they are.
Employ effective means of debt management
If you have too many debts, it will take its toll on your ability to afford your monthly payments, and when you have problems paying off your loans monthly, your credit score suffers. Efficient management of your debts will consequently lead to lower debt and a sustained credit score.
Always contact your creditors
Whenever you think you will fall behind or fall behind in your monthly payments, do not hesitate to contact your creditors. Some credit companies have cordial relationships with their customers and may set up alternative means of payment when informed about your situation instead of directly hitting on your credit score.
Do not close old accounts
An old account (often ten years old or more), when closed, will lose its credit history data and shorten the owner’s average credit age and cause a drop in credit score points.
Monitor your credit reports
Keeping records of your monthly transactions could help in eliminating errors in your credit reports that may have had an adverse impact on your credit score.
Having and sustaining an impressive credit score may not be the easiest journey to embark on, but it will prove to be worth it in the long run.