How to Maintain Your Credit Rating
Use a credit card for everything., Make your payments on-time., Ask for more., Get more than one source of credit., Don’t close lines of credit.
Step-by-Step Guide
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Step 1: Use a credit card for everything.
It might seem counterintuitive, but people with excellent credit use their credit cards more than most people, and they pay for everything on the card on time all the time.The difference is in the way they see the card itself.
Those with excellent scores think of it as the dominant form of currency, representing the money they have in the bank.
People whose scores are only fair often think of the card much differently, as an extravagance to be used sparingly. -
Step 2: Make your payments on-time.
Payment history is the biggest single factor determining your credit score.
It makes up for 35% of FICO.
Paying your entire balance on time, every time, is simple advice, and may seem trite, because it is easier said than done.
Nonetheless, paying on-time and in full are the most powerful tools you have to create and keep a good score., People with excellent scores ask for higher credit limits fairly frequently (once or twice a year).
It’s a great habit to get into as well, because it’s essentially asking your creditor to improve your credit score, since it decreases your overall credit utilization.
If you utilize too large a proportion of your available credit, it weakens your credit.
As with anything, moderation is key.
If you’re asking for higher limits every week, you will generate a number of hard pulls on your report, which causes your score to decrease.
Once or twice a year, ask a creditor with whom you have a good history for a higher limit. , The mix of credit is only about 10% of your total score, but it is a factor.
Once your credit is rehabilitated to the point that you can qualify for a loan, you should take out a small loan or line of credit in a different form than the type of credit you already have.
For example, if you only have one credit card, purchase an appliance on an installment plan or take out a small personal loan.
It’s never a bad idea to save up the amount of the loan before you apply, put it in a separate account, and simply have the loan payments automatically draw from that account. , If you cancel a card or another line of credit, the total amount of available credit you have will lessen, which will negatively affect your score.
If you have one card you don’t use very much, charge a small recurring bill, like a phone bill or a trash bill, to the card.
That will keep it active and with a small but manageable balance. -
Step 3: Ask for more.
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Step 4: Get more than one source of credit.
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Step 5: Don’t close lines of credit.
Detailed Guide
It might seem counterintuitive, but people with excellent credit use their credit cards more than most people, and they pay for everything on the card on time all the time.The difference is in the way they see the card itself.
Those with excellent scores think of it as the dominant form of currency, representing the money they have in the bank.
People whose scores are only fair often think of the card much differently, as an extravagance to be used sparingly.
Payment history is the biggest single factor determining your credit score.
It makes up for 35% of FICO.
Paying your entire balance on time, every time, is simple advice, and may seem trite, because it is easier said than done.
Nonetheless, paying on-time and in full are the most powerful tools you have to create and keep a good score., People with excellent scores ask for higher credit limits fairly frequently (once or twice a year).
It’s a great habit to get into as well, because it’s essentially asking your creditor to improve your credit score, since it decreases your overall credit utilization.
If you utilize too large a proportion of your available credit, it weakens your credit.
As with anything, moderation is key.
If you’re asking for higher limits every week, you will generate a number of hard pulls on your report, which causes your score to decrease.
Once or twice a year, ask a creditor with whom you have a good history for a higher limit. , The mix of credit is only about 10% of your total score, but it is a factor.
Once your credit is rehabilitated to the point that you can qualify for a loan, you should take out a small loan or line of credit in a different form than the type of credit you already have.
For example, if you only have one credit card, purchase an appliance on an installment plan or take out a small personal loan.
It’s never a bad idea to save up the amount of the loan before you apply, put it in a separate account, and simply have the loan payments automatically draw from that account. , If you cancel a card or another line of credit, the total amount of available credit you have will lessen, which will negatively affect your score.
If you have one card you don’t use very much, charge a small recurring bill, like a phone bill or a trash bill, to the card.
That will keep it active and with a small but manageable balance.
About the Author
Marie Ford
Creates helpful guides on cooking to inspire and educate readers.
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