How To Maintain Your Credit Rating
Repairing bad credit is a long battle, just like losing weight. It takes time and there is no shortcut. In fact, all methods to improve a credit score are likely to backfire. Therefore, be aware of advices that claim to help you improve credit score fast. So, the best way to rebuilding or maintain credit is to deal with it responsibly. Maintaining a good credit score has different benefits, such as quick loan approval, saving on insurance and credit deposits, low interest rates and so on. It is all about how you deal with your credit so that you can maintain it. Below here are a few tips on how you can easily maintain your credit rating.
Understand what goes into a good credit rating
By understanding what goes into a good credit status will make it easy for you to maintain a good one. Some of the key details that are used to calculate your credit score include your level of debt, payment history, age of credit and recent credit. Not everything financial is going to have an effect on your credit score.
Importance of paying your bills on time
When we talk about bills, it goes for all your bills and not just loans and credit cards. Though not all bills you pay every month will get reported to the credit bureaus, they may still end up on your credit report if you miss to pay them. Even a small library fine when left unpaid could wind up on your credit report. Therefore, in order to maintain a good credit rating, keep a track of all your bills and pay them off on time.
Maintain low credit card balances
Your credit score can worsen if you have higher credit card balance. To maintain a good credit score the balance of your credit card should be within 30 percent of the credit limit. Using more than 30 percent of your credit limit can be risky even if you are paying off the balance regularly. All card issuers typically report about the balance every month when your statement closes. So, if the balance is high it will affect your credit score.
Deal with your debt responsibly
It is not just the credit card balance that will have an influence on your credit score. Loan balances and other lines of credit will also have an impact on your level of debts equally. If you have got more debts that you can afford to repay back every month it will cost you credit score points. It may also become difficult for you to make timely repayments if you have limited income source. So, lower your debts are, more easier it will be for you to maintain a good credit rating.
Never close old credit cards
Once you have closed a credit card, the card issuer will stop sending updates to the credit bureaus. On such inactive card accounts, the credit scoring formula places less weight. Generally it takes 10 years or more for the credit bureau to remove closed account's history from an individual's credit report. So, if the account was an old one, you will lose your credit history and your average credit age will shorten. This will drop your credit score rating.
Limit your applications for new credit and loans
Whenever you apply for a new credit card or a loan, it hits your credit score, though marginally. One single credit inquiries can cost you 10 percent of your total credit score. Having a high credit score may not affect your credit history much. But if you have a low score you should be careful. On the other hand opening a new credit account will lower the average credit age by 15 percent. So, when applying for a new credit or loan, decide widely.
Keep a watch on your credit report regularly
Identity theft and credit card frauds are one rise these days. Such mishaps could lead to inaccurate information on your credit report. So, be cautious even if you have done everything right to maintain your credit rating. Check for errors on your credit report, which could otherwise lead to a drop in your credit score. Going through your credit card report once in a while will help you to detect the mistakes and maintain a good credit score.