Making wise decisions ahead of time is the ultimate solution to maintaining good credit. That is better than sorry along the way and consulting credit companies that fix credit and go through the hassle. A good credit score and a clean credit report will be a privilege. There are many ways to maintain good credit.
How do you maintain good credit?
Manage your credit
- Keep track of your spending– where your money is going plays a massive part in managing your credit. You’ll be informed about where you are spending the most and where you should cut off expenses when needed.
- Don’t exceed your credit limit– exceeding and getting close to your credit limit will also damage your credit.
- Have an emergency fund– having money saved up for, from the word itself, emergency will help you stick to your monthly budget or financial planning even if there are circumstances that are out of control.
- Pay what you owe– missed and late payments will have a massive impact on your credit score.
Make timely payments
- Be organized– plan your budget. Make financial planning and keep your payments and regular bills posted.
- Pay attention to due dates– your due dates are crucial for payments. If you miss even one payment, it will damage your credit score.
- Sign-up for automatic payments– signing up for auto payments can relieve the stress of remembering your due, especially if you have two or more debts. Or if you have a short memory, this will help you not to miss your payments.
- Keep your contact information current– when you move from your current home to another, you must update your information. It ensures you will still receive your emails and not miss any payments.
Stay in touch with your creditor.
There are instances when your creditor forgets to update your payments on your credit report. Which can lead to missed or delayed payments. Even if it’s incorrect information, it can still affect your credit score until you fix it yourself, and that’s another hassle, especially if you are busy.
So make sure to check and get an update from your creditor about your payments.
It would be best if you continued on the right path to avoid bad credit. Loans are arrangements made by two parties, and attached are interest and other fees.
Some home loans offer an “acceleration clause,” which covers you when you miss your mortgage payment. Your lender will apply this clause, allowing you to pay your missed fee the following month with a particular requirement. This type of loan is great to help avoid bad credit, foreclosures, and repossessions.
Here are some practices you should avoid to maintain good credit.
1. Making late payments– late payments have the most significant impact on your credit score. Late or missed one can damage your credit score no matter what scoring model is used. One more thing, it stays on your credit report for up to seven years.
2. Having a high debt-to-credit utilization ratio– your ratio is how much of your available credit you’re using compared to the total amount available to you. Lenders prefer a lower credit ratio, preferably below 30%. If you plan to open a new account to avoid a high credit ratio, that will worsen your credit score. First, hard inquiries are required when opening a new account, and second, new accounts lower the age of your credit accounts.
3. Applying for a lot of credit at once– every new account you apply to will require a hard inquiry. A hard inquiry is a process where lender requests to view your credit report. And a hard inquiry does damage your credit score. So you might want to open accounts that are only necessary,
4. Closing a credit card account- lenders and creditors like to see that you can handle different types of credit. If the credit is paid in full, you might not want to close it. It can also shorten the length of your credit history, which, unfortunately, affects your credit score.
5. Stopping your credit-related activities for an extended period- if your credit is unused for a very long time, it will be difficult for lenders or creditors to assess your credit report. They can report it as inactive and close the account, which can damage your credit score.
Avoid bad credit
Avoiding bad credit is much better than spending money on credit clean-up services. It’s not easy to maintain good credit, but it’s not easy to fix bad credit. Having bad credit also puts you in a tight situation when you need financial assistance in the future.
Give up on a bad spending habit and create a financial budgeting plan. It will be the first step to good credit and financial stability. It’s not an easy journey, but every first is hard. When you get a hold of it, it will become easier along the way.
When avoiding bad credit is really hard for you and you fall for a bad credit, consult the best credit repair company in your area. Research and choose a company with excellent ratings and, better yet, ask for recommendations from close friends and family.
Good credit should be maintained as much as possible to avoid hassles like these. Keep track of your finances and try to stay within your means. Discipline on your expenses will save you a lot of trouble in the future.