If you have ever tried to get a mortgage, loan, or credit card, by filling out the credit application and having your social security number checked, your credit report can give a financial story to a lender, and based on your credit score, could decide not only your fate of approval, but at what interest rate you will be approved for. The higher the score mean you can take advantage of the best interest rates on the market, saving you the most money every month. By keeping up with a few routines, you can ensure your score continues to climb.
Not Checking Credit Report
These days you just never know not only who may have access to your information and either started charging up your accounts, or opening new ones. By looking at your credit report at least once a year for free from the major credit bureaus you can ensure all accounts are up to date an accurate. Beyond that, your credit score is now included on monthly credit card statements, so you can see month over month how your score looks and can investigate further if you all of a sudden see a significant drop in your score.
One of the major makeups of your credit score has to do with your payment history. If you are more than thirty days late on an account, it will be reported to the credit bureau and can remain on there for up to seven years, whether it was an accident or not, so it’s a good idea to reschedule payments in advance so you don’t forget. While even being a day late will not hurt your score, but you can still get charged a late fee or receive an interest rate spike which could cost you more money over time if you carry a balance over to the next month.
Maxing Out Credit Limit
While carrying over a balance to the next month would cost you in interest, but the higher you reach your credit limit, the lower your score will go, so it’s always a good idea in both aspects to pay the full statement balance every month. It’s a myth that receiving a credit card limit increase hurts your score, in fact, it could give you a little extra cushion, provided you don’t see that opportunity to charge even more and reach your new limit.
Closing Zero Balance Accounts
If you have ever found yourself in debt, whether it was paying back over a few months, or even years, it can be stressful owing money, especially spending your hard-earned money paying back with interest. No matter how long it takes, getting out of debt should be cause for celebrating, so much in fact that your first reaction may be to close the account so you don’t pick up old spending habits. This can actually hurt your score as you are removing that available credit, especially if you have balances on other cards. If you want to avoid using, you can always cut up the card but leave the account open.