Preserve Your Good Credit Score

By Credit Professor | November 16, 2011 | Credit Score Report | No comments

There are benefits to having a great credit score – that’s a given. A good credit score will allow you to get a lower interest rate on your credit cards and loans, and save money on insurance and security deposits on utilities and mobile phones.

The more you know about what goes into your credit score, the easier it will be to maintain it. There are five components to your credit score: payment history, level of debt, credit age, mix of credit and recent credit.

One of the best things you can do in order to preserve your good credit score is to simply pay your bills on time – all of them. You should also work to be sure your credit card balances remain low. The higher your balance, the worse your credit score. Your card balance should be within about 30 percent of your credit limit or below. Even if you plan to pay off the balance when the bill comes, it’s still risky to charge more than 30 percent of the limit.

But credit card balances aren’t the only things that affects your credit score. Loan balances and lines of credit can also impact your level of debt, and having too much debt can cost you credit score points. It will also make it much more difficult to make your monthly payments. Keep your debt lower in order to maintain a good credit score.

You may think closing old credit cards will help your score, but the reality is that losing that credit history will shorten your average credit age and cause your credit score to drop. Rethink it if you are planning to close that older card.

You will also want to limit the amount of applications you submit for new credit. Every time you apply for new credit, your score takes a hit. If you have a high credit score, you stand to lose less points if you have a lot of credit inquiries than if you have a low credit score. If you want to keep your good score, lighten up on the credit apps.

Perhaps the most important thing you can do for your credit score is to keep an eye on your credit report. You should check it at least once a year, being careful to look for errors and fraudulent entries. Errors could cost you points, so it’s important to catch them and have them removed quickly.

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