5 Tips for preventing a bad credit score

5 Tips for preventing a bad credit score

5 Tips for preventing a bad credit score

No one plans a bad credit score, it’s just that life sometimes throws a curveball to you where  your credit history ends up badly damaged. Usually, it’s repeated mistakes that lead to low credit  scores. And protecting your credit score does not seem to be a big deal till you find it’s time to  borrow some money.  So here are some tips which should help protect your credit score and prevent a bad credit score.

1. Keep ‘Good’ credit accounts open

You generally think it’s better to close credit accounts which you don’t use often. However  before you do this, it’s better to first take a look at the account. If you have an account with a  history of payments made in full and on time, it’s better to keep such accounts open as it  provides a history that proves you can pay your debts responsibly. In fact, it will help your credit  score for as long as you keep it without operating it.

2. Close all small loans, credit cards and credit lines

Cleaning up your credit report by paying off and closing small balances on open credit products  helps prevent a bad credit score. Pay emphasis to the accounts with a history of late payments  and other problems as these accounts can damage your credit score as they show your  irresponsibility at making payments. Moreover, it’s difficult keeping track of so many small  accounts when life gets busy, and can lead to more missed payments.

3. Apply for credit after your credit score improves

New borrowers with credit for a short time of less than 2 years will have a low credit score as  you don’t have sufficient history to prove you are a responsible borrower. If you think opening  additional credit products even if you don’t need them will help improve your credit score, you  are wrong. Only apply for credit required and do not look for additional credit till your score  improves as open credit balances affects your credit score. If you are in need of secured cards please visit our Building Personal Credit page

4. Be punctual with full payments

Falling behind on monthly payments to lenders, landlords and utility providers can tarnish your  credit score as they regularly report to the credit bureau. Their word affects your score, and if  you are late with payments, your score will start dropping.

5. Close revolving balances

The proximity of your revolving balances like credit cards and credit lines to your credit limit  can prevent your score from slipping. Do whatever possible to keep your credit balances below  your limits preferably using just 30-35% of your available credit. Payment delays leads to  interest charges and missed payment fees which not only has a negative effect on your credit  score, you may have to pay an additional fee to your creditor.

So just take responsibility of your finances with the help of these 5 tips to avoid getting a bad  credit score. It’s good not only for your conscious, but also for getting a future mortgage or car  loan.

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