It’s possibly the most common concern of people that contact us about the possibility of obtaining finance. Apart from asking how they can improve their credit rating or score, they ask how a good score can be maintained. A common concern also is that taking out finance and having checks done reduces your score. With this in mind, Moolr have taken a look at ways to maintain a good credit score.
The more you know about your credit score and how it works the better chance you will have of keeping it healthy. Understand why you have the score you do, and you are halfway there. When credit bureaus calculate your credit score, there are five fundamental things that are taken into account. Firstly, your payment history, Then, your credit age, recent credit history, your level of debt and what sort of mix of credit you possess.
Closing a credit card account will mean that the credit card company will no longer send updates to the credit bureau. This means the report will base your rating solely on your active accounts. Ten years after a credit card account is closed credit bureaus it from your credit history. This shortens your credit age and causes your credit score to drop.
Obvious but true. It’s important Moolr reiterate this. Making late payments can really drag your credit score down. Some late payments may not be reported to the credit bureaus. However, you don’t want to see your credit score drop because you miss one tiny payment. Do not take the chance.
There is a general rule that borrowers should abide by. The higher your credit card balance is, the lower your credit score will be. As noted, this is a generalisation, but with huge elements of truth contained within. The key is this. Keep your credit card balances within 30% of your credit limit. Always consider your payment plan before you charge anything to your credit card. Also consider your limit and try not to use every available penny of credit on the card. Potentially, it paints a bad picture to prospective lenders.
Sometimes your credit report will flag up issues that could affect your credit rating. Whether this is a stolen credit card or fraud or inaccurate information, you should always keep a close eye on your report. Make sure you check over your report closely and ensure any detected errors are corrected. Doing so is vital in ensuring you maintain a good credit score.