Good Credit Habits
Obtaining and maintaining a good credit score is essential – your credit score will determine whether you can get approved for loans, mortgages, refinances, new credit cards, or even renting an apartment. Having a good credit score can also help you get lower interest rates on loans. Building and improving your credit score may take time but establishing good credit habits will help you excel financially in the long run and Hall Financial is here to help you! The following habits will help you make sure your credit is on the right track!
Pay every bill on time
Due dates are important to keep track of! Make sure that you are aware of when payments are due, and keep those dates organized. Payment history accounts for 35% of your score, so meeting the due dates is extremely important to obtain good credit. If you struggle with being on time, you can set up automatic payment plans to make sure you never miss a payment.
Pay off your credit card balances in full when possible, at least pay the minimum
Paying off your credit card each month in full is a great way to prove to the bank that you can be trusted to pay back debts. A good rule of thumb when making purchases on a credit card is to ask yourself whether you can afford to buy something, and whether you need it. This can help you avoid making purchases that you won’t be able to pay back! If you can’t pay off your credit card in full every month, make sure to at least pay the minimum amount due to avoid missed payments.
Keep your credit utilization low
Your credit utilization is the ratio between your credit card balances and your credit limits. The lower the utilization, the better. In general, it’s good to keep your utilization below 30% to avoid damaging your credit score. Those with high credit scores tend to have utilization scores in the single-digit percentages!
Only apply for new credit as needed
It’s good to have a mix of credit types, but too many credit applications at once can negatively impact your credit score. New credit applications account for about 10% of your score, and every time a lender checks your credit, it’s known as a hard inquiry. If lenders see that you’ve applied for several credit cards within a short time, your credit will likely take a hit and you might not be approved for new lines of credit.
Keep track of your credit score
Keeping an eye on your credit score and verifying that the credit reports are accurate can be extremely beneficial to maintaining a good score. You can review your credit reports at least once a year with Equifax, Experian, and TransUnion. Checking your credit score regularly can help you understand how your actions influence your score, and you can be sure that there are no inaccuracies or accounts that you haven’t applied for – which could be a sign of identity theft. Checking your score regularly will help you catch any problems right away and can help you understand and improve the way you manage your lines of credit.
Building and maintaining good credit can be intimidating, but with practice you can improve your score for the long-term. Keeping with these practices will ensure that you are set up for financial success!
For more information, chat with us at callhallfirst.com or give us a call at 866-Call-Hall.