5 Ways to Keep Your Credit Score in Good Shape
Credit rating and credit scores – thinking about your finances can sometimes seem like one confusing nightmare! We all know our credit rating is important but many of us aren't really sure what it is and what we can do to ensure our credit score is as healthy as possible.
1. Understanding Your Credit Score
The more you know about your credit score and how it works the better chance you will have of keeping it healthy. When calculating your credit score there are five fundamental things that are taken into account:
• Your payment history
• Credit age
• Recent credit
• Level of debt
• Mix of credit
2. Don't Close Old Credit Card Accounts
Closing a credit card account will mean that the credit card company will no longer send updates to the credit bureaus, meaning your score will be based solely on your active accounts. Ten years after a credit card account is closed the bureaus will remove it from your credit history, shortening your credit age and causing your credit score to drop.
3. Pay Your Bills on Time
This may seem like an obvious one but late payments can really drag your credit score down. Some bills won't get reported to the credit bureaus however you don't want to see your credit score drop because you have a small library fine.
4. Keep Credit Card Balances Low
The rule is – the higher your credit card balance is, the lower your credit score will be. The key to a good credit score it to keep your credit card balances within 30% of your credit limit. Always consider your payment plan before you charge anything to your credit card.
5. Monitor Your Credit Report
Sometimes your credit report will flag up issues that could affect your credit rating, whether this is a stolen credit card or fraud or inaccurate information. Make sure you check over your report closely and ensure any detected errors are corrected.