Your credit score is one of the most important measures of your financial health. It tells lenders at a glance how responsibly you use credit. The better your score, the easier you will find it to be approved for new loans or lines of credit. A higher credit score could lead to the lowest available interest rates when you borrow.
So you’ve built your credit up to your desired score. Now you just have to worry about keeping it there. A drop in your credit score can be stressful, but it doesn’t have to be permanent. Explore our guide to determine how to maintain your credit score.
- Don’t miss any payments: If you are more than 30 days past due on a payment, credit issuers will report the delinquency to at least one of the three major credit bureaus, likely resulting in a drop in your score.
- Limit hard inquiries on your credit report: Each time you authorize someone such as a lender to check your credit history, a hard inquiry is recorded on your credit report and could affect your credit score for up to two years.
- Don’t increase your credit utilization ratio: An increased credit utilization ratio can indicate to lenders that you are overextended and that, financially, you are not well-positioned to take on new debt.
- Don’t decrease your credit limit: Similar to maxing out your credit cards, having your credit limit decreased can increase your credit utilization ratio and negatively affect your credit scores.
- Think twice before closing a credit card you don’t use: Closing a credit card account will not only increase your utilization ratio, it may also reduce the length of your credit history- both of which can impact your credit score.
- Ensure the information on your credit report is accurate: Although it’s rare, mistakes happen, and it is possible that incorrect information on your credit reports- such as inaccurate personal data or payment history- is causing your scores to drop.
Maintaining a good credit score has plenty of advantages, including potentially saving a significant amount of money and stress. Good scores could help you qualify for more credit products at lower rates. You have the ability to keep your credit score up by improving your own habits and staying diligent.