How to Ensure You Maintain a High Credit Rating
Maintaining a high credit rating is very important for your personal financial success. There are many reasons why this is true, but what it all boils down to is that you will be wasting a lot of money on your biggest purchases if you have poor credit. A low credit rating will cause you to pay more for houses, cars, insurance, and other items purchased on credit. There are several ways you can improve and maintain your credit rating, and in this article we will take a look at four ways you can quickly improve your score.
The first way to maintain a high credit rating is to lower your credit utilization percentage. This is the percentage of available credit that you are currently using. For example if you have a credit card with a $1,000 available credit limit and your balance is $900, your credit utilization ratio for that card would be 90%. If you want to maintain a high credit rating you’ll want to keep this percentage at 30% or lower for your total available credit. Add all of your credit card limits together and make sure the total balances on all of your cards are not higher than 30% of your available credit.
The second way to improve and maintain a solid credit rating is to make sure you pay all of your bills on time. If you currently have any old credit card debts that have been charged off, you’ll want to attempt to settle these so you can eliminate negative items from your credit file. Once you have cleaned up all the delinquent items you can maintain your high score by paying everything on time. It is also helpful if you pay the balances off in full every month. Although this is not necessary as long as you keep your balances under the 30% level we discussed earlier.
The third way to maintain your high credit rating is to have a strong mix of credit. If you only have one consumer credit card, this will not be enough established credit. It is wise if you have a mix of long term credit, such as car loans or a mortgage, and at least two credit cards that you use regularly. A Visa or MasterCard credit card is a more important account than a store credit card. Store credit cards do not count as much towards your score as regular cards.
The fourth and final way is to monitor your credit and make sure that everything is accurate. You can get a free copy from all three credit bureaus once a year by going to AnnualCreditReport.com. It is recommended to pull your credit file from one bureau every four months so you’re only four months away from getting an updated picture of your credit. If anything is inaccurate or older than seven years you may want to dispute it and have it removed.
These are four steps you can take towards improving and maintaining a healthy credit rating. Following these four steps will ensure that you save as much money as possible on the big purchases in your life.