Tips for Maintaining a Good Credit Score

There are plenty of things you can do to maintain the good credit score you’ve worked so hard to build, and one excellent reason why you should care: money. A good credit score typically means lower interest rates, and that means more cash in the bank. It’ll also be easier for you to get loans and credit.

1. Treat all of your debts equally when it comes time to pay

Your credit score takes into account both revolving debt (credit cards) and trade line or installment debt (mortgages). It doesn’t matter that your line of credit, for instance, has a lower interest rate, you shouldn’t prioritize other loans if it means neglecting that payment. Constantly having a balance on your credit cards can lower your score and hurt your chances for getting approved for loans or any other credit card accounts you may want to open.

2. Keep old credit cards open to maintain the longer history

There are a few reasons why keeping old cards open can benefit your credit score, and one is the length of your credit history, which accounts for 10 percent of your score. This is especially important for older cards, because they give your credit report a longer record, and this is good.

3. Consolidate cards to have fewer balances

Having a number of small balances spread out over several different cards may seem smart, but this approach can actually backfire if you overuse it. Instead, you’re better off paying these amounts down. A good way to improve your credit score is to eliminate nuisance balances. This is because having multiple cards with balances can lower your score rather than boost it. If you’re looking to pay off credit card debt quickly, consider a balance transfer card to consolidate all your monthly payments onto one card.

4. Make sure you pay every bill on time, every time

Your payment history accounts for 35 percent of your credit score. If you have trouble keeping your bills in order and staying organized with payments, set up electronic billing and payment reminders to stay on top of your bills. If you’re terrible with being on time, you can set up auto payment plans through your bank or with your credit card to ensure that bills are paid for you, on time, every month.

5. Try not to rack up the balance on your credit cards

If you have one credit card with a $1,000 limit and have a $500 balance, your credit utilization ratio is 50 percent. Aim for 30 percent or lower. The people with the best credit scores only use about 8 percent of their available credit.

6. Keep an eye on your credit report and make a stink about errors

Errors on your credit report are more common than you might think. Luckily, you can keep an eye on them by taking advantage of the free yearly credit reports you’re entitled to from TransUnion, Experian, and Equifax. When you get the reports, go over them carefully to look for errors, and get on the horn right away to dispute ones you find.

7. Avoid applying for new credit whenever possible

New credit applications account for 10 percent of your score. Each time you apply for credit that prompts a hard inquiry into your report, your score will take a hit. Unless it’s absolutely necessary, don’t apply for new credit cards or loans if you want to keep your score up.

8. Make payments in full when possible, and otherwise pay at least the minimum

There are at least two reasons why you should never just pay the minimum on your cards, and one is because this is a terrible way to pay off debts. Paying just the minimum means even small debts could be stretched out over years, and this means exorbitant interest fees. However, if the minimum is all you can manage, make sure you pay at least that every month; otherwise you’ll have late or missed payments on your report for seven years.

9. Creditors are real people too, so contact them if you encounter problems

If anything should ever happen and you face financial troubles that could affect your ability to pay your bills, then call your creditors right away. Often, you’ll be able to arrange alternative payment solutions, negotiate a lower interest rate, or otherwise mitigate the situation.

10. Live within your credit means and don’t exceed your limit

According to Wells Fargo, a 20/10 rule is a good rule of thumb for credit. Don’t let your credit card debt exceed more than 20 percent of your total yearly income after taxes. And each month, don’t have more than 10 percent of your monthly take-home pay in credit card payments.

11. Chip away slowly to reduce your overall debt load

If you currently have debt of any kind, taking steps to eliminate it will gradually improve your credit score. Stop using your cards, make a budget, and start paying down your high-interest cards first while maintaining minimum payments on all the other debts.

12. Get all your rate shopping done within a two-week period

To avoid having inquiries impact your score when you apply for a new loan, finish your rate shopping within two weeks because there’s a 30-day grace period during which inquiries won’t affect your score.

13. Consider using a credit monitoring service

Credit monitoring services like Credit Sesame watch your credit daily for unexpected changes. On top of alerting you to dips or increases in your score, it can also serve as an early warning sign of identity fraud.

14. Use credit boosting services

There are a couple of innovative ways of boosting your credit score, above and beyond the ordinary “pay on time” methods. On is Self-Lender, a company that helps you take out a loan and pay it off each month. Whenever you make a payment, they’ll report the good behavior to the credit bureaus and your credit score and profile will likely improve.

Another is Experian Boost, which allows you to include your positive payment history for utility bills and cell phone bill payments to your credit score – payments which otherwise would not affect your score at all. Best of all, the service is completely free.