Around 22 percent of Americans have a “very good” credit score of 781 or above.
Working your way up to good credit is only half the battle. Keep reading to learn more about how to maintain good credit after you achieve it.
Know What Makes Up a Credit Score
Just because you have a good credit score doesn’t mean you know how it got there. The first step to maintaining your good score is knowing exactly what makes up a credit score.
Your credit score is based on the following things:
- Payment History — 35 percent
- Credit Utilization Rate — 30 percent
- Credit History — 15 percent
- New Credit — 10 percent
- Types of Credit — 10 percent
So to keep your good credit score, you need to focus your attention on each of these areas.
Pay on Time
Since payment history makes up 35 percent of your credit score, paying on time is how to have a good credit score.
While this sounds easy enough, when you have a lot of bills to juggle, it’s easy to forget one. But missing a payment deadline by even a few days can have drastic effects on your credit score.
To avoid this, set up auto payments for your recurring bills. This ensures you’ll never miss a due date again.
Keep Accounts Open
While you may be tempted to close old credit card accounts if you’ve paid off their balance — don’t!
If you close an older account that has no balance, you lower your credit utilization rate and the age of your credit. The best thing to do is to keep your accounts active by using them for small amounts every few months.
With old accounts open, be extra cautious about preventing credit card fraud.
Keep Your Balances Low
Another way to help your credit utilization rate is to keep your balances low.
If you have multiple credit cards, use each of them for smaller purchases instead of only using one card. The closer your accounts get to the limit, the more it affects your credit score.
With a great credit score, you’ll get great credit card offers. Seek out info on all the best offers to ensure you’re getting the best rewards and interest rates.
Stay Up to Date
If you’re still asking how to maintain a good credit score, the best advice is to stay up to date with your score.
Use websites like Credit Karma to conduct “soft checks” on your credit score. These don’t count as hard inquiries, which can hurt your score. Instead, you can check your score as often as you like to see what changes are happening.
Beyond How to Maintain Good Credit
With these tips, you know exactly how to maintain good credit. Keep that credit score up and watch the benefits roll in.
Remember to always pay your bills on time. Keep your old credit cards open and the balances low on your active cards. And most importantly — check your credit frequently to identify anything that may bring your score down.
Looking for more financial advice? Visit the financial archives of our site for all the latest tips and tricks.