If you’ve ever applied for a mortgage, personal loan, credit card, or even a job these days, your credit can be an important factor in not only the interest rate that you get, but the approval itself. While sure, income is important as well to make sure you can financially afford the payments, in order to get the best interest rate on the market and save the most each month, the credit score needs to be top not, otherwise you will waste even more money on interest.
Make On-Time Payments
If you are thirty days late from the payment due date your credit will get hit, and unfortunately you can see that blemish for the next seven years or so, not to mention your credit score taking a significant hit. By scheduling your payments in advance, you can be sure to never miss a payment. While missing even a day won’t ruin your credit, but you can still get charged with a late fee and may even see an interest rate spike, which could cost you even more money each month if you carry over a balance.
Pay Off What You Charge
One of the great things about credit cards is that you can charge throughout the month and it will not be due until next month, giving you a paycheck or two to save up, but if your carryover a balance it not only hurts your credit score but it can cause a path leading to debt. By paying off what you charging by the statement due date you can keep your credit utilization low, and probably continue to get credit limit increases. A good way to stay on top of charges is to look back on the previous month’s statement and go line by line to see where every dollar is going, trying to cut expenses where you can.
Keep the Applications to a Minimum
While having your credit pulled will only reduce your score by a few points, it could be those few points that take you from ‘excellent’ to ‘good’ and cost you getting the best interest rate. If the application makes sense, like for a refinance to lower your mortgage interest rate or a credit card with great cashback rewards, otherwise the credit applications should be kept to a minimum if possible, and even those can stay on your credit report for a couple years.
Leave Zero Balance Accounts Open
If you’ve had a problem with debt in the past and have finally rid yourself of that financial burden, it should be cause for celebration, as not everyone makes it out without financial repercussions. When you do finally see that zero balance on your credit card statement, your first reaction may be to close the account so you don’t follow down that same path, but that could actually be doing your credit score harm, removing that available credit. Instead, cut up the card so you don’t use it, but still keep the account open so you can hang onto the available balance.