How to Keep a good Credit Score

Anyone who has ever gotten a credit card or a loan has a credit history which in turn, establishes your credit score. Having a strong score is important because it has a big impact on whether or not you qualify for different forms of credit throughout your life. So how do you ensure you’re maintaining a good credit score? Here are a few ways:

• Make sure you have actually established a credit history. You can do this by getting a credit card or a loan and using it on a consistent basis.
• Maintain a strong payment history by making all your payments on time, making at least the minimum payment if you can’t pay the balance in full, and never skipping a payment.
• Increase the length of your credit history by establishing credit as soon as you can so it can improve over time. Even if you don’t think you need it, consider keeping an old credit card active by using it periodically (assuming there are no fees to keep the account open) and consistently making payments on it.
• Try to avoid maxing out all of your available credit. A good rule is to stay below 30% of the credit you have access to. Maxing out what you have available to you can be seen as a risk to lenders. For example, if you have a credit card limit of $10,000, try to stay below $3,000 owing at any given time.
• Keep the number of credit products you apply for at a minimum. Every time you apply for a new product, a credit check (also called a “hard hit”) is made on your credit report, indicating you applied for credit. Too many credit checks may indicate to a lender that you are a credit seeker. Note that a “soft hit” would not affect your credit score. This would result from inquiries you make on your own credit report or from another entity asking for a copy to update their records (such as a business you have an established relationship with).
• Keep the number of credit checks on your credit report to a minimum by shopping around for credit products within a smaller time frame such as two weeks. This way, they can be treated as a single inquiry on your credit report. You should also make sure you only apply for credit when you really need it.
• Use a mix of multiple types of credit like a credit card and a loan or line of credit, but make sure you don’t take on more debt than you can handle.

Having a good credit score is a great thing! Not only does it affect whether or not you will get approved for credit but it can have an impact on other things like the interest rates you get and even whether or not you qualify to rent a space. Start by getting a copy of your credit report then do everything you can to keep your score up. Credit reports can be requested from TransUnion or Equifax.

For more information on the importance of your credit score, contact one of our Member Service Representatives.