5 Quick Tips to Keep Your Credit Score High
To earn miles and points for years to come, you’ll want to make sure to maintain good credit. Here are five quick tips to keep your credit score in the green.
1. Keep Your Oldest Card Open
If you still have the first credit card you opened, keep it. If not, figure out which active account you’ve had for the longest period of time, and make a note to keep this one in your wallet whether or not you are currently using it. If you’re paying an annual fee but don’t use the card, call the bank and ask them to switch your account to a free card.
2. Pay It Off Every Month
Always pay your cards on time and always pay them in full. Setting up each card for an automatic payment of the full balance each month whenever you get a new card helps to ensure you don’t miss a payment when you’re managing multiple credit card accounts with varying payment due dates.
3. Keep Your Credit Line High and Your Balance Low
When determining the “amount you owe” for your credit score, banks do not calculate by dollar amount, but rather as a percentage of the available credit that you have. If you have a $5,000 credit line and a $4,000 balance, you’re using 80% of your available credit. However, if you have a $50,000 credit line and a $4,000 balance you’re only using 8%. The latter is better. The best situation you can be in is to have a good sized credit line and a 0$ balance.
4. Monitor Your FICO Score
You can pay to see your FICO score at myfico.com at a cost of $19.95 per report. More and more credit cards (nearly all the travel cards issued by Barclaycard, Citibank, and Discover now offer a free subscription to FICO as part of their card member agreement. You can even set your account to alert you when your FICO score changes.
5. Be Wise When Applying for Loans
If you’re about to apply for a mortgage, refinance your house, or take out a personal loan, your credit score will be used to determine your interest rate. Keep a closer-than-usual eye on your credit score in the months ahead of your application. After you lock in your low interest rate then you can strategically apply for a handful of new credit cards and meet the minimum spend for big bonuses while paying for the the big expenses that will come with your new home!
If you follow these principles, you may be surprised to learn that applying for new cards and paying them off increases your available credit, improves your payment history, and can actually increase your credit score. The future is bright!
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Image by Colin