Top Tips to Build and Maintain Healthy Credit

Building and maintaining healthy credit is important, it can be a challenge but the outcome is worth the learning curve to understanding your credit score. Good credit can help you achieve some of your biggest financial dreams, like owning a home or even starting your own business.

If you’re like most people, your credit score might not be perfect – and that’s ok! There’s no secret formula to building a strong credit score, but there are some guidelines that can help.

HERE ARE OUR TOP TIPS TO HELP YOU BUILD AND MAINTAIN A HEALTHY CREDIT SCORE:

1. Swipe Responsibly – A good rule of thumb for building solid credit is to only borrow what you can afford to pay back. This means, only using your credit card if you have enough available in your bank account to pay the balance off in full right away. It’s also good practice to leave your credit card at home if you’re heading out shopping or somewhere you will be tempted to spend.
2. Stay Below Your Limit – Experts recommend keeping your credit spending at about 30% of your maximum balance. Avoid maxing out your credit cards to keep you in a good place financially and out of debt.
3. Start Small – If you’re just starting to build your credit, do your research and begin with opening only one card. The last thing you will want to do is open a number of new cards, creating additional debt to keep track of. Be sure you understand the interest rates and fees that come with any card you decide to open. This will help you stay ahead when it comes to payment dates.
4. Never Miss a Payment – Missed credit card payments not only leave you behind in debt but also show lenders that you have a track record of being financially irresponsible. This can negatively affect your future when it comes to, for example, wanting to purchase a home as you’re more likely to be approved if you have a healthy credit history and a higher credit score. Not to mention to continuous late fees that build and interest making your balance continue to grow even without spending anything.
5. Pay More than the Minimum – If you’ve had a credit card for some time now, it’s likely you also have built a balance on that card. This is not necessarily a bad thing for building credit, as long as you’re consistently making payments on-time every month. If you’re unable to pay off your balance in full, you’ll want to make sure you’re paying more than the minimum payment due in order to pay off your balance as quickly as possible to help improve your credit score and avoid pesky interest payments.
6. 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.
7. Review Your History Regularly – Take some time to review what you’re spending money on. If you find yourself swiping your card every time you grab a latte in the morning, you likely aren’t using your credit wisely. Try designating your credit card for emergencies or basic needs such as groceries and gas to help promote good spending habits. 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.