Maintaining a good credit score is vital if you want to be approved for loans or credit cards. Follow these tips and you're sure to stay in good standing.

There are a number of habits you can adopt to maintain the good credit score you’ve worked so hard to build, and one main reason why you should adopt them: money.

A good credit score typically means lower interest rates, and that means more cash in your bank account. A good credit score will also make it easier for you to be approved for credit in the first place.

Here are my top tips for keeping up your credit score.

1. Treat All of Your Debts Equally When It Comes Time to Pay

Your credit score takes into account both revolving debt, like credit cards, and installment debt, like mortgages.

It doesn’t matter if your line of credit, for instance, has a relatively low interest rate; you shouldn’t prioritize other loans if it means neglecting that payment. Constantly having a balance on your credit cards can lower your score and hurt your chances for getting approved for loans or any other credit card accounts you may want to open.

2. Keep Old Credit Cards Open to Maintain a Long Credit History

There are a few reasons why keeping credit cards open can benefit your credit score, and one is the length of your credit history, which accounts for 10% of your score.

This is especially important for older cards, because they give your credit report a longer record.

3. Consolidate Cards to Have Fewer Balances

Having a number of small balances spread out over several different cards may seem smart, but this approach can actually backfire if you overuse it.

Instead, John Ulzheimer of Credit Sesame says you’re better off paying these amounts down. “A good way to improve your credit score is to eliminate nuisance balances,” he says. This is because having multiple cards with balances can lower your score rather than boost it.

If you’re looking to pay off credit card debt quickly, consider a balance transfer card to consolidate all your monthly payments onto one card.

4. Make Sure You Pay Every Bill on Time, Every Time

Your payment history accounts for 35% of your credit score. If you have trouble keeping your bills in order and staying organized with payments, set up electronic billing and payment reminders to stay on top of your bills.

If you aren’t good at keeping track of what’s due when, don’t worry, there’s an app for that.

If you’re terrible with being on time, you can set up automatic payment plans through your bank or with your credit card to ensure that bills are paid for you, on time, every month.

While you’re paying credit card bills and rent on time, make sure you also get credit for paying for your utilities and phone. You can sign up for Experian Boost, link your bank account, and get credit for paying those bills on time, too. The service is free and includes a free credit report and myFICO score.

5. Try Not to Rack up a Balance on Your Credit Cards

If you have one credit card with a $1,000 limit and have a $500 balance, your credit utilization ratio is 50%. Aim for 30% or lower.

The people with the best credit scores only use about 7% of their available credit.

6. Keep an Eye on Your Credit Report and Make a Stink About Errors

Errors on your credit report are more common than you might think. Luckily, you can keep an eye on them by taking advantage of the free yearly credit reports you’re entitled to from TransUnion, Experian, and Equifax.

When you get the reports, go over them carefully to look for errors, and get on the horn right away to dispute any errors you find.

Read more: How to Get a Free Credit Report and Credit Score

7. Avoid Applying for New Credit Whenever Possible

New credit applications account for 10% of your score. Each time you apply for credit that prompts a hard inquiry into your report, your score will take a hit.

Unless it’s absolutely necessary, don’t apply for new credit cards or loans if you want to keep your score up.

Read more: Soft Pull vs. Hard Pull — How Each Affects Your Credit

8. Make Payments in Full When Possible, and Otherwise Pay at Least the Minimum

There are at least two reasons why you should never just pay the minimum on your cards, and one is because this is a terrible way to pay off debts! Paying just the minimum means even small debts could be stretched out over years, and this means exorbitant interest fees.

However, if the minimum is all you can manage, make sure you pay at least that every month, otherwise you’ll have late or missed payments on your report for seven years.

9. Creditors Are Real People Too, so Contact Them if You Encounter Problems

If anything should ever happen and you face financial troubles that could affect your ability to pay your bills, then call your creditors right away. You’ll often be able to arrange alternative payment solutions, negotiate a lower interest rate, or otherwise mitigate the situation.

10. Live Within Your Means and Don’t Exceed Your Credit Limit

Keep the 20/10 rule in mind. Don’t let your credit card debt exceed more than 20% of your total yearly income after taxes. And each month, don’t have more than 10% of your monthly take-home pay in credit card payments.

11. Chip Away Slowly to Reduce Your Overall Debt Load

If you currently have debt of any kind, taking steps to eliminate it will gradually improve your credit score. Make a budget and start paying down your high-interest cards first while maintaining minimum payments on all the other debts.

12. Get All Your Rate Shopping Done Within a Two-Week Period

To avoid having inquiries impact your score when you apply for a new loan, finish your rate shopping within two weeks. Credit bureaus might treat multiple inquiries made within a short period of time as a single hard check, rather than multiple hard checks.

13. Consider Using a Credit Monitoring Service

Credit monitoring services watch your credit daily for unexpected changes. On top of alerting you to dips or increases in your score, it can also serve as an early warning sign of identity fraud.

Read more: Do You Need to Pay for a Credit Monitoring Service?

14. Use Credit Boosting Services

There are some innovative ways of boosting your credit score, above and beyond the ordinary “pay on time” methods. One company is Self, which allows individuals to take out a loan and pay it off each month. Whenever you make a payment, they’ll report the good behavior to the credit bureaus and your credit score and profile will likely improve.

Summary

There are plenty of tips, tricks, and healthy habits you can use to maintain and even improve your credit score. Some of the best things you can do include not overspending and paying bills on time.

On top of that, you might also avoid applying for new credit, keep an eye on your reports for errors, and take steps to eliminate debt and lower your credit utilization.

Read more

Related Tools

About the author

Chris Muller picture
Total Articles: 197
Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He’s also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016. You can connect with Chris on Twitter.