How to Improve and Maintain Your Credit Score

Your credit score is basically what defines you as a financially responsible person nowadays. A good credit score can be advantageous in many ways: it can help pass difficult loans, it can help with lowering interests, and even refinancing old loans.

FICO has determined the formula for calculating your credit score and needless to say it is too complex for a simple mind to decipher. How your FICO score is calculated is an argument for another day, of course, right now we need to talk about how you can improve your score and maintain it.

Make Timely Debt Payments

The best way to improve your credit score is by making timely debt payments, be it on your loans or your credit cards. Missing and delayed payments have a negative impact on your credit score but just like that making timely payments is also good for increasing your credit score.

If you feel like you need to be reminded to make your payments on time, you can ask your bank to send automatic reminders to your phone or you could use an app for the same purpose as well.

Keep a Watch on Your Credit Card Balance

Using up a lot of your credit card balance is also known to decrease your credit score. It is said that you should use less than 30% of your balance since it is easier to pay off as well.

Pay All your Bills on Time

Debt payments are necessary but it is also important to pay all your bills on time to show that you are a financially responsible person. This includes everything like your utility bills and medical bills. It seems like a small gesture at first but truly shapes your financial persona for those it is relevant to.

Do not Remove Old Debts from your Credit Report

It is true that many people are in a rush to remove their old debts from their credit reports since they think it is going to have a negative impact on their score.

This is a huge misconception since when credit card companies and loan lenders see that you have responsibly paid off all the debts you previously owed, they begin to trust you more and usually become more negotiable and easier to handle.

Do not Close Old Credit Cards

Closing old credit cards is also a really bad idea because of the impact it has on your credit score. It is especially not a good idea when there is already balance on the credit card you are closing. This is why it is best to have one or two credit cards at most since they are much easier to maintain than many credit cards at once.

Do not Request for a Lot of Credit in a Short Amount of Time

You do eventually need more credit than you originally started off with but you need to take at least a year or a two-year-long gap between asking for more credit on your cards. Asking for too much credit at once has a very negative impact on your score since credit card companies become suspicious of your activities.

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