How to Keep Good Credit Using These Simple Habits

How to Keep Good Credit Using These Simple Habits 1

According to Equifax, a credit score of below 580 is downright poor and labels you a “subprime borrower.” Approximately 11.1% of American consumers have credit scores below 540 and are automatically disadvantaged when it comes to borrowing loans. If this sounds like you, worry not; we’re here to help.

The only upside to having terrible credit is that there’s lots of room for improvement. This isn’t to say that people with good credit can kick up their feet and relax. No, they still have to figure out how to keep good credit and maintain their stellar credit scores.

With stellar credit, there’s always the temptation to borrow more than you can repay. Going overboard with borrowing is what brings most people with good credit to ruin. Today, we’ll be showing you how to avoid these pitfalls and adopt good money habits to maintain your good credit.

Sign up for Due Date Alerts on Credit Cards and Other Loans

A crucial part of maintaining good credit is making timely payments on your debts. With our busy lifestyles, it’s easy to relegate loan repayment to the backseat. It’s not uncommon to legitimately forget about repaying your loan.

To prevent this from happening, consider signing up for a due date alert. That way, you can get a repayment notification on the phone or an actual call when it’s due. This helps keep your monthly payment history in check for a perfect credit score.

Sign up for Credit Card Autopay

There are times when financial constraints render you unable to pay off the entire balance. If that’s the case, you can pay minimum payments every month. The best part is you can enroll in automatic payments that allow the credit card company to make automatic deductions on your bank account.

Don’t worry; it’s on you to determine what amount you want the credit company to deduct from your account. You also decide when you want the credit card company to deduct from your account.

Consolidate Your Debt

Debt consolidation is an excellent method to pay off all your debts and reduce repayment costs. Debt consolidation involves rolling up all your debt into one loan with a single monthly payment. The easiest way to consolidate your debt is to borrow a credit card loan that covers all your debt.

Here’s how you can consolidate your debt:

  • List down all the debt you want to consolidate and add them up
  • Borrow a debt consolidation loan equal to the amount you want to pay off
  • Pay off all the loans you consolidated with the loan
  • Make monthly payments later until you fulfill the debt consolidation loan

It’s a good idea to consolidate all your high-interest loans to avoid racking up a bundle in interest fees. Borrow a low-interest consolidation loan to cover your high-interest debt and save a bundle in interest fees.

Keep an Eye on Your Credit Score

Remaining oblivious of your current credit score doesn’t do much to improve or maintain it. It’s important to keep a close eye on your credit score to detect any issues early on. Doing so also helps you identify what actions are detrimental to your credit score.

Each of the three credit bureaus should furnish you with a free credit report every year. This credit report will also help you identify any instances of identity theft you might not be aware of. Plus, checking your credit score regularly is the only way to know whether you’re maintaining food credit.

Keep Your Credit Utilization Ratio Low

Your credit utilization ratio is how much of your credit card limit you use divided by your credit limit. If you want to get your credit utilization ratio, you can:

  • Add up all your credit card limits on all your credit cards
  • Add up your credit card balances
  • Divide the credit card balance and multiply by 100 to get a percentage

Strive to keep your credit utilization ratio as low as possible. As a rule of thumb, always try to keep it below 30%; anything above 50% is a cause for alarm. A high credit utilization ratio puts your credit score at risk.

Make Timely and Complete Payments(If Possible)

Your payment history accounts for approximately 35% of your credit score. That’s why it’s important to make timely payments on your dues. If you can, make complete payments of all pending debts.

We’ve already mentioned something about automatic payments and reminders. These can help you pay all your bills on time and maintain a good credit score. You can even use a smartphone app to help you keep track of your bills.

Hire a Credit Repair Company

If your credit card score borders on the subpar, you might need some help from a credit repair company. A credit repair company will work with credit bureaus and financial institutions to dispute negative information from your credit report.

Credit repair companies can help dispute inaccurate or unverified information. Removing inaccurate or unverified information will go a long way in improving your credit score.

Don’t Exceed Your Credit Card Limits

No matter how tough life gets, it’s never a good idea to exceed your credit limits. Exceeding your credit card limits puts you at greater risk of defaulting. Defaulting your credit card debt is extremely detrimental to your credit.

To be on the safe side, consider adopting the 20/10 rule. This rule means you keep your credit card debt below 20% of your annual income, minus taxes. Ensure using your credit card isn’t part of your daily routine to help abide by this rule.

How to Keep Good Credit Made Easier

Now that you know how to keep good credit, let the above tips become part of you. Remember, only proper money habits will guarantee good credit. It takes a lot of sacrifices, but it’s definitely worth it.

Contact us today if you need help repairing or improving our credit.