There is a proverb that “It’s easier to obtain than maintain”. Rebuilding credit is the first step after repairing it; the next is maintaining it. You should have a consistent financial position and a strategic money management habit or policy to maintain good credit. Here are the key steps to help you build and sustain a strong credit profile over time
Monitoring Credit Regularly
Keeping track of your credit score and remaining updated on your credit report helps to identify errors and mistakes. You can download a free copy of the credit report from the Annual Credit Report website.
Timely Payment
A simple habit of making timely payments can save you 35% on your credit accounts. You can set up reminders or start an auto payment option using software to avoid late fees. Late payment has a powerful negative impact on a credit score.
Proper Utilisation of Credit
Keeping credit utilisation below 30% is one of the most innovative ways to maintain good credit. Requesting higher credit limits from creditors and making regular and timely payments.
Control Credit Expenditure
To avoid debt, avoid unnecessary purchases with credit. Consider using a mix of credit accounts, such as credit cards, instalment loans, and retail accounts, to demonstrate responsible credit management.
Avoid Closing Old Credit Accounts
The length of your credit history positively impacts your credit score. Among two or more accounts, if you need to close an account urgently, keeping an account open with a good payment history is a strategy that helps build a good credit history.
Diversity in Credit Mix
Try to make diversity in the credit portfolio. Credit cards, mortgages, auto loans, and personal loans can improve your credit. Lenders like to see responsible management of different types of credit.
Limit New Credit Applications
Applying for new credit accounts within a short period can negatively impact your credit score because each application requires an individual inquiry, which can lower your score. Apply only when necessary.
Emergency Fund
Saving for future emergencies is a valuable money management strategy that can help you avoid using credit unnecessarily in emergencies.
Professional Guidance (If Needed)
If you’re struggling to maintain your credit and find it challenging to manage independently, you can contact a reputable and legitimate counsellor. In this case, a certified credit counsellor can provide proper guidance. Organisations like the National Foundation for Credit Counselling (NFCC) offer resources to help you maintain good credit habits. 10. Stay Educated on Credit and Financial Management: You must be educated on credit laws, consumer rights, and best financial practices to make informed decisions. Websites like the Consumer Financial Protection Bureau (CFPB) offer valuable financial education resources.
Stay Educated on Credit and Financial Management
To make informed decisions, you must be educated on credit laws, consumer rights, and best financial practices. Websites like the Consumer Financial Protection Bureau (CFPB) offer valuable financial education resources.
Maintaining good credit habits can assure you of a promising future in finance. If you fail to keep your credit after repairing it, you may again fall into the same trouble with your credit score and financial stability. It is essential to build and maintain good credit habits.