The Do's and Don'ts of Credit

1. Pay your bills on time: The first step is knowing your DUE DATES!! If you have multiple cards, calling your lender and requesting a specific due date may be helpful. That way you can schedule when payments are due, making it easier to keep up with. Another tip is to set up auto pay for your minimum payments. This makes it hassle and worry free. Your bill will never be late - of course you must make sure the funds are available! **If you will be late on a payment, be proactive and reach out to the creditor before the late payment hits your score** Payment history accounts for 35% of your score!!!!!

2. Be aware of your utilization percentage: Credit utilization is the second most important factor used in credit scoring. It measures how much credit you have in use versus your total available credit limit. If you want to maintain a good score, you should never utilize more than 30% of the credit you have available. Less is always better. But maxing out your credit cards is bad and should be avoided!!!!!! {See our Credit Card spreadsheet template}

  • The more credit you have available = the lower your utilization

  • The lower your utilization = the higher your score

3. Pay MORE than the minimum: The idea of the credit card companies is to keep you in debt as long as its a profit to their company. If you only pay the minimum requirements - you are helping them succeed. (no, no, noooo!!) Strive to pay more than the minimum, even if it's a few dollars more. This will reduce the amount of interest you pay, thus allowing you to pay the card off faster!! (yes, yes, and YES)

4. Ask for credit limits and lower interest rates: Like the old saying goes..."you'll never know if you never ask." Call your creditor and request a higher credit limit WITHOUT a hard inquiry! Also, try to negotiate a better interest rate.

5. Sign up for credit monitoring service: A lot of credit card companies provide FREE credit monitoring, but you can also sign up for an account with each credit bureau (Experian, Equifax, and TransUnion). Most offer identity monitoring as well which can help prevent identity theft.

6. Don't close old accounts: A lot of people think "ok, I've paid the balance down to zero, now I can close the account." NOOOOOOO - This will affect your length of history! Credit Age (length of history) accounts for 15% when it comes to credit. If its an account that is in good standing - use it for something that you ALREADY BUDGET FOR - a tank of gas, netflix, nail appointment...SOMETHING!! Just don't close it as the age is helping you!! Keep the balance low so you can pay it off each month.

7. Don't apply for multiple line of credit at the same time: Applying for credit over and over within a 6 month period can be viewed as irresponsible. This can also create HARD inquiries on your credit report, which can lower your credit score between 2-20 points. Hard inquiries stay on your report for 2 years (Geesh!) Also, opening new accounts affect the average of your length of history by shortening your overall average.

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