A better credit score can have a meaningful effect on your life. After all, a huge part is played by your credit score in determining the interest rate on your mortgage, car loan or student loan. Your credit score is also evaluated by potential landlords and employers. Maintaining a comfortable life can be very difficult without having a good credit.
Below mentioned are some good habits which can make a healthy impact on your credit score:
- Check credit report annually:
You should order a copy of your credit report and review it for any in accuracy or incorrect information at least once a year. Mistakes on credit report are common and incorrect information on your report can lead you to a lower score.
There are three major credit bureaus
You need to look over the reports sent by all three of them. You are entitled to have one report free for once a year by the law. You can view them all at once or stash them throughout the year but either way you need to remember that you cannot let an error remain unchecked.
- Reduce credit card balances:
If you utilize more than 30% of the credit you have available on any card at any point in a month, you are damaging your score coming from the amounts owed by 30%. It’s very healthy for your credit if you reduce the balances on your credit cards and keep them very low.
- Rethink credit applications:
Your credit score is made up 10% my new credit inquiries. If you apply for too much new credit at once, that can signal that you are facing a financial trouble and thus your score will drop as a result.
But not it does not limit you to never access credit. As long as you are applying for loans and credit cards of which you are actually in need of and wait for about 3 to 6 months between new applications, your score will remain unaffected in the long term.
- Make multiple payments each month:
You should consider making multiple smaller payments throughout the month instead of making one huge payment on your credit card right before the due date. This will eventually help you make your payments on time, reduce your balance and keep your credit utilization ratio low throughout the cycle.
- Paying your credit card bill in advance of its due date:
This is why it is considered a good idea to make the payment on your card roughly halfway through the month, and keep a close watch so that your balance will be away from that 30% threshold. By using this technique, your credit utilization will be updated no matter when Credit Card Company report it to the credit bureaus.