To apply for loans or credit cards maintaining a good credit score is essential there are plenty of things that can be done to maintain a perfect credit score that is so hard to build, and one excellent reason why it should be done is money. There are many advantages of having a perfect credit score, such as enjoying a lower interest rate on credit cards and loans. A perfect credit score also permits saving money on insurance and security deposits on new utilities and cell phone service. Using credit wisely and responsibly is what helps in maintaining a perfect credit score. A good credit score generally means lower interest rates, and that means more cash in the bank. It will also be smoother to get loans and credit.
With that said, here are the top 10 ways to maintain a perfect credit score.
1. Treating all debts equally when it comes time to pay
A credit score takes into count both revolving debt (credit cards) and tradeline or installment debt (mortgages).It does not matter that the line of credit has a lower interest rate, prioritization should not be other loans if it means neglecting that payment. Constantly having a balance on credit cards can lower the score and hurt the chances of getting approved for loans.
2. Keeping old credit cards open to maintain the longer history
There are a few reasons why keeping old cards open can benefit the credit score, and one is the length of the credit history, which counts as 10% of the score. This is particularly important for an older card because it gives the credit report a longer record.
3. Consolidate cards to have fewer balances
Having several small balances spread out over several different cards may seem smart, but this approach can backfire if overused. People looking to pay off credit card debt swiftly can consider a balance transfer card to consolidate all monthly payments onto one card is a good move.
4. Making sure of payment of every bill on time, every time
The payment history counts for 35% of the credit score. If there is trouble in keeping the bills in order and staying organized with payments, setting up electronic billing and payment reminder helps to stay on top of the bills. If terrible with being on time auto payment plans through a bank or with a credit card can be set up to ensure that bills are paid on time, every month. While paying credit card bills and rent on time, making sure to get credit for paying for utilities and phone is important.
5. Try not to rack up the balance on credit cards
If there is one credit card with a $2,000 limit and has a $1000 balance, the credit utilization ratio is 50%. Aim for 30% or lower. The people with the best credit scores only use about 8% of the available credit.
6. Keeping an eye on the credit report and make a reek about errors
Errors on the credit report are more frequent than people might think. Fortunately, there can be an eye that can be kept on it by taking advantage of the free yearly credit reports entitled from TransUnion, Experian, and Equifax. When getting the report, going over it carefully and looking for errors is essential.
7. Avoid applying for new credit at any moment
New credit applications account for 10% of the score. Each time applying for credit prompts a hard inquiry into the report and the score will take a hit.
Unless it is necessary, there is no need to apply for new credit cards or loans if wanting to keep the score up.
8. Make payments in full when possible, or else pay at least the minimum
There are at least two reasons why people should never just pay the minimum on their cards, and one is because this is an awful way to pay off debts! Paying just the minimum means you can even drag small debts out over years, and this means excessive interest fees. Nevertheless, if you can manage minimum, making sure to pay at least that every month is important, otherwise there will be late or missed payments on the report for seven years.
9. Creditors are real people too, so contact them if experiencing problems
If anything should ever happen and faced with financial troubles that can affect the ability to pay the bills, then calling creditors right away is the best option.
Often, people will be able to arrange alternative payment solutions, negotiate a lower interest rate, or else alleviate the situation.
10. Chipping away slowly to reduce the overall debt load
If there is a debt of any kind, taking steps to reduce it will gradually improve the credit score.
It is better to stop using cards, make a budget, and start paying down the high-interest cards first while maintaining minimum payments on all the other debts.
It is important to make a note of these factors and to work on improving the credit score over some time. You can use plenty of tips and healthy habits to maintain and even improve the credit score to perfection. Some of the best things you can do to get the perfect credit score involve consistency with the payments, not overspending, and paying bills on time. Apart from it, other things that you can include avoiding applying for new credit, keeping an eye on the reports for errors, and taking steps to clear debt and decrease credit utilization.