Anyone who plans to buy a new home or finance a car understands the importance of a credit score. Those three digits tell lenders how likely you are to pay back your debts. They can also determine your interest rates and whether or not you will get a loan at all. That’s why you have to monitor your score carefully and keep it as close to a perfect 850 as you can. Here are some tips to help.
Pay your bills on time.
This is one of the main rules for maintaining a high credit score because whether you pay back debts is a huge factor in calculating your score. So, if you have trouble remembering to pay bills, use autopay options.
Only apply for new credit cards when necessary.
Your score is partially determined by how many credit accounts you’ve opened, when you’ve opened them, and how many times lenders have recently checked your credit. You don’t want to acquire too many cards too fast.
That said, you might consider keeping starter cards open. These cards are designed for people without credit histories. Keeping them—even after you’ve stopped using them—could help boost your score. The accounts might lengthen your credit history and lower credit card debt ratio relative to your available credit.
Be careful about co-signing.
Everyone wants to help out friends and family but co-signing a loan can cost you. Only do it if you know you can take on the loan payments if your loved one can’t. Otherwise, your credit score could plummet.
Watch out for identity theft.
Always be careful when giving out personal information, such as your social security number, birth date, and credit card info. Stay alert for phone and online scams and only make purchases from secure websites. If someone does steal your identity, they can open a card in your name, miss payments, and kill your score. That’s why you should always monitor your credit score.
You can also get identity theft protection through some home insurance policies, and your coverage may help your score recover. Take a look at your policy and see what options you may have in case this happens.