Helpful Tips and Tricks to Achieving and Maintaining Good Credit

December 11th, 2019 by

Helpful Tips and Tricks to Achieving and Maintaining Good Credit

A car loan is a preferred way of financing your car purchase. A lot of factors play an important role in the approval of the car loan and interest rate offered. One of them is a good credit score. Here we have discussed some tips and tricks to achieving and maintaining good credit.

What Is a Good Credit Score?

The credit score generally ranges from 300 to 850. A credit score of 690 and above is considered good while a credit score of 800 is considered excellent. Very few people have a credit score above 800 and most people have a credit score in the range of 600 and 750. 

How to Find Your Credit Score

There are several ways to find your credit score. Some of the sources where you can find it are your loan and credit card statements. Many auto loan companies provide their customers with credit score information through monthly loan statements. If your loan company does not provide you credit score, you can use a credit score service.

How to Improve and Maintain a Good Credit Score

Pay Your Bills on Time 

You should always pay your bills on time, including your loans, credit card bills and utility bills. Your credit score won’t improve by paying bills on time but it would decrease if you don’t pay on time. Late payments are referred to collection agencies and this gets reported to credit bureaus, which will affect your credit score negatively. 

Keep Your Credit Card Balances Low

Your credit card balance is the amount you owe to the credit card company. When you make a payment every month, the balance decreases. You need to always make full payments towards the monthly credit card bill. If you make a partial payment or minimum payment, the balance increases as the overdue amount attracts a higher rate of interest. According to financial experts, a credit card balance should be within 30 percent of the credit card limit to maintain a good credit score. 

Don’t Close Old Credit Cards

Financial history plays an important role in your credit score. When you close an old credit card account, the credit card company stops sending updates to credit bureaus that affect your credit score adversely. The credit bureau will remove your closed credit card accounts from your credit history after a period of 10 years which decreases your average credit age and your credit score drops. 

Manage Your Debt

Your loans also affect your credit score. Having too many loans also affects your credit score adversely, so you need to manage your debt intelligently. You should work towards reducing your debt in a planned, timely manner and avoid taking out new loans. 

Don’t Apply for New Loans or New Credit Cards Frequently

When you apply for a loan or a new credit card, the credit card company or the lender initiates a credit inquiry before approving your financial request. Too many credit inquiries can hurt your credit score.

So, you can see it is not hard to achieve and maintain good credit. Whenever it comes to finances, you need to be disciplined and ensure you always maintain a good credit score.

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