Credit ratings are up in the United States. According to the Experian 2020 Consumer Credit Review, the average credit score hit an all-time high of 710 last year, up seven points from 2019. Currently, 69% of Americans have a good credit score of 670 or higher. .
In truth, maintaining a good credit score will give you a lot of personal finance leverage, including giving you the best interest rates when applying for new credit, insurance policies, and loans. refinancing opportunities.
Read on for five simple tips to keep your credit score high, and if you want to know how your credit report is doing, you can use Credible to check your credit score without affecting it negatively.
5 BENEFITS OF HAVING A GOOD CREDIT SCORE
How to keep your credit score high
1. Manage your debt
The first key to improving your credit history is paying off your debts. If you’re juggling multiple balances and payments right now, you might want to consider debt consolidation as a repayment strategy. Debt consolidation involves using a new loan to pay off all your existing accounts and streamlining them into one monthly payment. Ideally, the new debt consolidation loan will also have a lower interest rate, saving you money. long-term money.
While it’s also important to keep an eye on the number of new accounts and difficult inquiries that appear on your credit report, if your outstanding balances stem from credit card debt, take out an installment loan. in the form of a debt consolidation loan can actually help improve your credit mix, which accounts for 10% of your overall FICO score. Likewise, it can lower your credit utilization rate, which is 30% of your overall FICO credit score.
Visiting Credible can help you compare debt consolidation options to find the best personal loan rates for you, based on your credit score and credit history.
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2. Make payments on time
Then, after getting your debt under control, make sure you do your best to make all your payments on time. Major credit reporting agencies agree that payment history is one of the most important factors in determining a good credit score. For example, payment history makes up 35% of your overall FICO score and up to 40% of your TransUnion score.
With that in mind, if you want to avoid having bad credit, it’s imperative that you make your payments on time each month. If you need help remembering to make your payments on time, you can always set reminders or set up automatic payments from your bank account.
Not sure where you fall on the credit score spectrum? Next, you should start using a credit monitoring service to track your credit score. Credible can help you set up a free service today.
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3. Keep old credit cards open
Many people think it’s a good idea to close old credit card accounts that they no longer use. However, in reality, it can hurt your score. Length of credit history (or credit age) makes up 21% of your TransUnion score and 15% of your FICO score. To that end, it’s a good idea from a credit reporting standpoint to keep old credit cards open, even if you rarely use them.
If you’re opening a new credit card, keep in mind that it may require further investigation, but the new line of credit could improve your credit utilization rate if you keep your balances low. Credible can help you compare and contrast multiple types of credit cards, so you can find the perfect fit.
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4. Watch your credit
Next, it’s important to regularly monitor your credit for any signs of identity theft, fraud, or other negative information. Simply put, if your personal information falls into the wrong hands, it could spell disaster for your credit score. That said, regularly checking credit score and credit reports for errors is important for your overall creditworthiness (you can do it for free today with Credible’s credit monitoring partners).
If you find that some information on your credit report is incorrect, the first thing to do is to file a dispute. When you dispute a credit file, you write a letter to the credit reporting agency asking them to correct the information in question. Then the credit reporting agency has time to investigate the dispute and determine whether to make a change. Additionally, if you suspect fraud, you can request that a security freeze be placed on your report, which prevents creditors from accessing your report and others from opening accounts in your name.
If you don’t want to have to keep an eye on your report, you can always consider credit monitoring services. Credit monitoring services keep tabs on any serious or non-serious investigation of your report and will notify you of any suspicious activity.
Check out some of Credible’s partners here to sign up for free credit monitoring. You can receive instant alerts on late payments, fraudulent activity, credit score changes and more.
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5. Keep credit card balances low
Finally, when your goal is to improve your score, it’s important to keep your credit card balances as low as possible. Your credit utilization rate, which measures the amount of credit you use compared to the total amount of credit you have, is 30% of your overall FICO score and 20% of your total TransUnion score.
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The bottom line
Credit monitoring is one of the most powerful things you can do to improve your credit score. Credible can help you see where you stand without hurting your score.
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