The average FICO score in the U.S. is 704.
This is the highest average score since 2005. Americans are doing better with their credit.
A big reason for this is the availability of information. When you are educated about your credit score and how it is calculated, you better understand how to manage it.
Keep reading to learn more about how to maintain good credit.
Pay Off Your Balance on Time
One of the easiest ways to maintain good credit is to pay off your balances in full each month.
Doing so will establish your credit without you having to incur interest or fees. If you aren’t able to pay your balance in full, at least make the minimum payment and be sure to do so on time.
If something happens in your life that affects your ability to pay your bills, contact your creditor. They are people too and there’s a good chance they will work with you.
Understand How Your Credit Score is Determined
You’ll have an easier time maintaining a great credit score if you understand what goes into it.
Learn more about how your payment history, amount of debt, recent credit, age of credit, and how your credit is distributed all affect your score.
Having a good credit score will make qualifying for a payday loan much easier, should you need one.
Keep Old Cards Open
Many people don’t know this one.
You should never close old credit cards because they count towards your credit age.
Having only new credit lowers your credit score. Keep your old accounts open and active so they are still reported to the credit bureaus.
Be Smart About New Credit
Only apply for new credit when you really need it.
Even having too many new inquiries on your credit report can lower your score. Keep in mind that when you open a new account, your average credit age will drop.
Monitor Your Credit Report
You have a right to review your own credit report.
Even if you are managing your credit well, mistakes can be made by other parties. Regularly check your credit report to keep an eye out for errors negatively affecting your score.
Also, be aware that credit card fraud and identity theft can impact your score if there is misinformation on your credit report.
If you do find an error, report it to the credit bureau immediately.
Reduce Your Debt
One of the best ways to maintain good credit is to stay out of debt.
Having too much debt will negatively affect your credit score. It’s not just credit card debt you need to be aware of.
Anytime you have a line of credit or owe money, you should try your best to pay it off. Even small debts can be reported to the credit bureaus if they end up in collections.
More Tips on How to Maintain Good Credit
These are only a few of the top tips on how to maintain good credit.
Learning about how credit works and how credit scores are determined will help you better understand your financial situation and outlook.
For more credit advice, check out the financial section of our blog.