Keep your credit rating high to save on interest. It will also allow you to obtain the lowest rates when you are in need of borrowing. A good credit score will make it easier for you to get financing to buy a home, car or other large-ticket items.
How to keep good credit?
You can improve your credit rating by paying your bills on time, and maintaining low balances on revolving account. Knowing your credit score will help you identify any potential issues and fix them before they turn into bigger problems.
The first thing to do is review your credit report from all three of the nationwide consumer reporting agencies (Experian, Equifax and TransUnion). Your credit score can be better understood by reviewing your credit reports. Contact one of the bureaus immediately if you suspect something is wrong or if you believe you are the victim of an identity theft.
To improve your credit rating, pay off your debts whenever you can. This is an easy way to improve your score. This can be done by setting up automatic payment or alerts to remind you of your obligations.
Credit utilization rate also plays a major role in your credit score. This reflects how you use revolving credits. It's typically best to keep your credit utilization rate under 30% so lenders know you're only using the amount of credit that's necessary for your expenses.
Don't open several new credit accounts in a short period of time, as this could look risky to lenders. Opening a lot of accounts can also lower your average account age, which can hurt your credit score.
You can limit the use of revolving debt by maintaining a credit limit of at least 30% on your cards. This will help you to improve your credit rating by showing the credit bureaus a good mix of revolving credits.
Another important factor that affects your credit score is the combination of loan products you use. The credit scoring models that calculate your scores take into account your ability to responsibly manage a variety of different kinds of loans, from credit cards to mortgages or personal loans.
A credit card is a simple way to build your credit rating, but only if you are responsible and use it sparingly. It is best to only charge a little amount on the card every month and make sure you pay your bills on time.
It is also possible to shift your outstanding debt by lowering your rate of credit utilization and paying off lower-interest debt before moving onto the higher-interest debt. This will raise your credit score. However, you're better off focusing on debt repayment and reducing your balances.