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10 Habits to Improve your Credit Score


Having a good credit score is very important, and it’s the baseline of establishing trust with potential lenders or investors. This also makes it easier for you to get approved for certain services that are often difficult to obtain, especially if you have an abysmal credit score.

Pay your bills on time

Paying your bills on time is essential for keeping a good credit score. That’s easier said than done, of course, and there are plenty of reasons why you might pay a bill late.

Some bills, like your mortgage, insurance or car payments, are automatic, and some bills, like student loans, aren’t due until your next payday. Just because a bill is automatic doesn’t mean it’s necessarily due on time, though. Credit card bills aren’t intuitive, and it’s your responsibility to pay them on time.

If you pay a bill late, that late payment shows up on your credit report and hurts your score, just like if you missed a payment altogether. Either way, your credit score takes a hit.

Do not open too many accounts at once

Credit scores are calculated based on credit history, so the more accounts you have, the more information there is to calculate your score. However, having too many accounts can hurt your score if they are all different types of credit.

Cashfloat recommends having a handful of good accounts than a bunch of accounts that vary in quality. And it’s not just the number of accounts — it’s their variety that scores are watching. For example, let’s say you have five credit card accounts (a credit card, a Visa, a Discover card, a credit union loan and a secured credit card). But if you only have one or two types of credit, your score will be lower.


Don’t close an old credit card account

Many people assume closing an old credit card account is an easy way to improve their credit score. Indeed, closing an account can help your credit score, but only if you use it responsibly and don’t have any other credit accounts open.

Closing an account removes some of the activity from your credit report. But it also removes some of the history, which can affect the overall size of your credit history. In general, the longer your credit history, the higher your score.

Closing an account also affects the way that account is factored into your credit history. If you close an account that’s been open for a long time and you’ve been making payments on time, it will countless toward your entire credit history. 

Make sure you have a low balance on your credit cards so you don’t end up paying interest fees

Keeping a low balance on your credit cards is essential to avoid high interest rates. If you have a large balance on your credit card, you are more likely to default on the payments and go for a loan for debt consolidation. Credit cards usually charge a high-interest rate if you are carrying a balance on your credit cards. The best way to avoid paying a high rate of interest is to pay your credit card bills in time.

Make small monthly payments on past due amounts, but don’t pay original balances if you can help it

If you have a balance on a credit card, paying it off in full isn’t necessarily the best way to reduce your debt. There are pros and cons to each approach. Paying off a credit card balance in full might be better for your credit rating, but if you don’t pay the minimum monthly payment, the balance could grow over time, becoming more of an issue.

A better strategy is to make small monthly payments on past due amounts. This tactic can reduce your debt faster than paying it off in full. If you haven’t paid your credit card bill on time for a few months, call the issuer and ask to set up a payment plan.

You may be able to pay less than the minimum monthly payment and spread it out over several months. This tactic can also serve to get someone’s attention and motivate them to pay what they owe.


So, what do you think ?