8 Tips to Build and Maintain Healthy Credit

Building and maintaining healthy credit is important for a number of reasons. A good credit score can help you achieve some of your biggest financial dreams, like owning a home or even starting your own business.

If your current credit history isn’t flawless and the dream of a perfect credit score sounds as just that—a dream—don’t fret. There are plenty of steps you can take to begin building solid credit as well as strategies you can put in place to maintain that healthy credit.

Here are our top tips to help you build and maintain a healthy credit score:

  1. Swipe Responsibly

If you’re working on building solid credit, a good rule of thumb is to only borrow what you can actually afford to pay back. This means, only use your credit card if you have enough available in your bank account to pay the balance off right away. Avoid falling into credit debt by leaving your credit card at home if you’re heading out shopping or somewhere that may tempt you to spend.

  1. Stay Below your Limit

Experts suggest keeping your credit spending at about 30% of your maximum balance is best. Maxing out your credit cards regularly shows financial irresponsibility and can leave you stuck in debt for longer than you’d like.

  1. Start Small

If you are just starting to build your credit, the last thing you will want to do is open a number of new cards, creating additional debt to keep track of. Begin with just one credit card to use overtime and talk to a financial advisor when you feel you are in the right place to open a new account.

  1. Pay your Balance in Full

If you are starting to build credit outright, then the best way to begin is by charging small amounts on your card that leaves you with a balance far below your credit limit. This should make it easy for you to pay off the balance, in full, each month which will help to improve your credit.

  1. Never Miss a Payment

Missed credit card payments not only leave you behind in debt but also show to lenders that you have a track record of being financially irresponsible. It also suggests that you struggle to make necessary payments on time. This can greatly affect your future when it comes to, for example, wanting to purchase a home. When you begin the home purchasing process, a lender will review your credit score and credit history to ensure you are a viable candidate who will pay the loan off. They will then take this information to determine whether or not you will be approved for the loan. You are more likely to be approved if you have a healthy credit history and a higher credit score.

  1. Pay More than your Minimum

If you have had a credit card for some time now, you are likely to already have a balance on your card. Having a balance on your credit card is not necessarily a bad thing, though; making on-time, consistent payments every month will help you continue to build your credit. However, if you are unable to pay the balance in full, you will want to make sure you are paying more than the minimum payment due each month to help pay off your balance as quickly as possible. Not only will paying off debt sooner help your credit, you also won’t have to worry about pesky interest payments.

  1. Build a History

If you’ve just opened a new card, plan to keep it long-term to help you display a solid history of creditworthiness. Lenders appreciate at least a few years of experience in maintaining timely payments and the longer you keep your card, the more likely your credit score will increase.

  1. Regularly Review your Account History

What exactly are you spending money on? If you’re swiping your credit card every time you grab a latte in the morning, you likely aren’t using your credit wisely. Designate your credit card for emergencies or basic needs such as groceries and gas to help get you into good spending habits and avoid unnecessary shopping sprees. Also, keep an eye out for any types of fraudulent purchases; if you notice anything strange, notify your credit card company immediately to save yourself from financial distress.

 

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