Getting a good credit card rating can be quite a challenge, especially for first time card holders. With so many things to consider, keeping up with your payments can be a bit daunting at first. However, as long as you’re able to keep these five simple tips in mind, then maintaining a good credit score isn’t as hard as you imagine it would be.
It goes without saying that this is one important tip you should apply for just about any kind of bill that you’re paying for. This is because late payments can wind up on your credit report, adversely affecting your score as a result. While many might simply dismiss bills that aren’t typically associated with credit reporting, creditors might call in collections agencies to report on late payments that will wind up on your credit report in turn.
Pay Your Entire Balance
This is especially true when you happen to manage multiple credit card balances. Smaller balances on multiple credit card accounts can add up, and it’s better to consolidate your purchases to only one or two credit cards. These nuisance balances tend to reflect poorly on your credit score, even if they individually don’t carry a large balance at the end of the month. The number of cards that retain a balance is factored in with your credit score, so it’s best to pay those smaller balances while keeping a main card for everyday use.
Maintain a Long and Healthy Credit History
There’s a running misconception that once you pay off a big debt, like a car or a house, you should try to have it removed off your credit history as soon as possible. Large negative items on your report don’t necessarily mean a bad thing, especially if you were able to handle their payment in a good and timely fashion. The handling of good debt also equates to good credit, and keeping a record of these payments will also pay off for you in the long run.
Don’t Always “Max Out” Your Credit Limit
One of the factors in computing the credit score is how much credit you’re using from your allotted credit limit. Ideally, you want to keep the percentage of credit used versus your credit limit at 30 percent or lower. Even if you fully pay your balance every month, if your utilization ratio is high, it might not reflect well on your credit score. This is because certain credit card issuers include the balance you used in their report to the bureau. One way to get around this is by requesting the issuer if it’s possible to make multiple payments throughout the month instead of paying everything at the end.
Limit Your Credit Card Applications
Some may recommend getting multiple credit cards of varying credit limits to keep your overall balance relatively low. And while this is a perfectly valid way to manage your credit balance, just make sure that you aren’t biting off more than you can chew. Neglecting to pay just one of those cards on time can have serious repercussions on your overall credit score. Also, take note that whenever you apply for credit, your score gets taken down by a small percentage. So even if the rewards being offered by a new credit card seem attractive, make sure to think twice before signing up for another account.