Five Steps on How to Keep a Good Credit Score

One of the advantages of having a good credit score is that you can get good rate on a mortgage or any other type of loan. However, lending firms are not the only ones who uses your credit score but also some insurers, cell phone providers, landlords, and employers. Here are five tips on how you can build and keep a good credit score.

First, make timely payments because 35 percent of your credit score is derived from your history of paying your debts on time. Sign up for free email alerts that the majority of credit card companies send to the consumers. These will remind you more or less a week before so that you won’t forget paying.

Second, be cautious about how much of your available credit you are going to use because 30 percent of your credit score is affected by the amount you owe. It is good if you use 30 percent of it but it would be best if you use only 10 percent or less.

Third, do not close your old accounts because it will decrease your overall available credit. As a result, it might increase your utilization as well which, in turn, could more likely have a negative effect on your credit score.

Fourth, consider applying for different kinds of credit such as installment loans, those with a fixed payoff period, and revolving loans, those loans that are open-ended. Some examples of installment loans are auto and student loans, and an example of revolving loan is credit card. According to the credit agencies, it is best to have a few of each kind of credit.

Fifth, check for errors in your credit report. You can get a free copy of your credit report once every year from the big three credit reporting agencies – Equifax, Experian and TransUnion. If there are errors on your credit summary, account information or personal information, contact the creditor immediately.

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