Maintaining Financial Freedom: 5 Interesting Tips to Help You Avoid a Poor Credit Rating

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( — January 10, 2019) — People with decent credit often have one thing in mind – keeping that rating up. Individuals beginning to build credit similarly want to avoid seeing their rising score tank. So, how can we avoid ever having to deal with a poor credit score? After all, your credit score is your key to better interest rates on future loans and important milestones like home mortgages. Here are five tips for keeping your score in the green.

1. Make timely payments. Paying all bills on time is by far the most crucial piece of advice anyone avoiding bad credit can get. A single late payment can impact your score, but a more extensive history of late payments can completely sink it. This doesn’t only apply to credit cards and loans that regularly appear on your credit report. Any overdue bill that gets sent to collections, including a utility bill, can hurt your creditworthiness.

2. Don’t apply for everything at once. Taking out credit cards to rebuild or build credit is a good idea, provided you have a plan to act responsibly. You can click here for more on that. But as you pursue improved credit or any credit at all, proceed to the application process carefully. Completing applications usually results in an inquiry, which has a small impact on your credit report. If a slew of inquiries appear, it could drag your score down further than you’d like.

3. Avoid relying on plastic. While judicious credit card use can improve your score, you’d be wise to avoid living on your cards day to day. This can increase your credit utilization ratio, which can affect your score. It also increases the likelihood that you’ll dig yourself into debt and have trouble making your payments on time.

4. If you must skip a bill on occasion, choose wisely. Our primary goal is to pay every bill on time, but life doesn’t always allow for this. If you have to miss a bill or make a late payment, choose one you know won’t show up on your credit report right away. As we learned in the first tip, any unpaid bill can hurt a credit score, but if you want to buy yourself a few weeks without hurting the score, make sure loans and cards get payment priority.

5. Start saving now. Ultimately, the best way to meet our goal of making full payments on schedule is to have that money available. If you have a little cash left over at the end of the month, sock it away. This way, when money is a little tighter, you don’t risk missing that payment. While your credit report won’t factor in your savings, your savings can also help you avoid putting emergency spending on your credit card, increasing debt.

If you want good credit, there’s simply no better way than paying those bills on time. In addition, you can avoid applying for too many loans and cards at once, and make strategic decisions about what to pay and when if money is tight. And when you start saving now, you’re helping to secure a good score in the future.