Maintaining a good credit score is crucial if you want to take a loan or apply for a credit card. Aside from increasing your chances of getting approved for a loan or credit card, a good credit score will also allow you to enjoy low interest rates on credit cards and loans and savings on insurance and security deposits. So if you ask yourself the question “Do I have a good credit score?,” there are some things that you can do to ensure that you have a good credit score.
What goes to your credit score?
By knowing what goes to your credit score, you will be able to know how to maintain a good one. There are five pieces of information that is used to calculate your credit score—payment history, level of debt, credit age, credit mix, and recent credit.
Pay your bills on time
Paying your bills on time can contribute to you getting a good credit score. While certain bills do not get reported to the credit bureaus when you make timely payments, a default in payment could get you reported to these bureaus. So in order to answer the question “Do I have a good credit score? Even a small library fine can reflect on your credit report when left unpaid. So keep making prompt payments to maintain a good credit score.
Keep Your Credit Card Balance Low
The higher your credit card balance associated to your credit limit is, the worse your credit score will be. As much as possible, keep your combined credit card balance within 30 percent of your combined credit limit to keep a good credit score. Charging more than 30 percent of your credit limit can be a risk even if you settle the balance when your billing statement comes.
Don’t Close Old Credit Cards
Closing a credit card also reduces the amount of credit available to you. For example, if you have three cards with a combined credit limit of $10,000 and close one with a $3,000 limit, your combined credit limit will decrease to $7,000. Also, credit bureaus will remove your account history from your credit report will decrease your credit score.
Manage Your Debt
Your credit card balance is not the only thing that can affect your credit score. Your loan balance and credit line can also affect your level of debt. It can cost you some valuable points on your credit score. So in order to keep a good credit score, make sure to lower your debt.