Most of us use credit in our lives, be it a big mortgage, or the odd loan and a couple of credit cards. And because we do, we therefore need to maintain a good credit score to get that credit in the first place. We took a look at how to keep a healthy credit score, once you get to that point.
The more you understand about your credit score and how it works, the better your chances of maintaining it in good shape are. You’re halfway there if you understand why you have the score you do. There are five basic factors taken into account by credit bureaus when calculating your credit score. Your payment history comes first, followed by your credit age, recent credit history, debt amount, and the type of credit mix you have.
When you close a credit card account, the credit card provider will stop sending updates to the credit bureau. This implies that the report will only give you a score based on your active accounts. Credit bureaus remove credit card accounts from your credit history ten years after they are closed. This reduces the length of your credit history and lowers your credit score.
This is self-evident but true. It’s critical that Moolr emphasise this. Late payments can have a significant impact on your credit score. It’s possible that some late payments aren’t recorded to the credit bureaus. However, you don’t want your credit score to suffer as a result of a single missed payment. Don’t take the risk.
Borrowers are expected to follow a broad norm. Your credit score will suffer if you have a significant credit card balance. As previously said, this is a generalisation, yet it contains a great deal of reality. This is the key. Maintain a credit card balance of less than 30% of your credit limit. Before you charge anything to your credit card, think about your payment plan. Also, keep in mind your credit limit and try not to use up all of the available credit on your card. It may give a negative impression to potential lenders.
Your credit report may occasionally highlight difficulties that may have an impact on your credit score. You should always keep an eye on your credit report, whether it’s because of a lost credit card, fraud, or false information. Make sure you go over your report thoroughly and repair any flaws you find. It is critical to do so in order to keep a solid credit score.