Pay your bills on time- Pay your bills on time, every time! One way to make sure your payments are on time is to set up automatic payments on the creditor’s website or from your banking institution. Make sure that you have enough funds to clear the account, otherwise the account will show late. Also, don’t just pay the minimum balance if you can afford to pay more. This helps you to pay off the balance sooner, and help you credit rating along the way.
Don’t get close to your credit limit- Credit scoring models look at how close you are to being “maxed out”, because the formulas predict that people using too much of their available credit may have future troubles repaying their debt. If you use too much of your available credit, you could hurt your scores. Always make sure to have your credit cards paid down under 30% of the available credit.
Don’t apply for a lot of credit in a short time period, especially if you are getting ready to apply for a mortgage or auto loan- Your credit score may drop if you have too many credit accounts, and it may also drop if you apply for or open a lot of new accounts in a short period of time. If you are planning to take out a loan for an auto or house, be very careful not to open or apply for a lot of new credit before complete the purchase of your new car or home, as this could hurt your score.
The longer your credit history the better- Credit scores are based on how long an account has been opened, the longer the better. Do not close an account that you have had opened for a long period of time as this could dramatically lower your scores.
Sarah Kahley-Rufo
