5 Ways to Improve and Maintain a Good Credit Score

Strategies for Financial Health

Maintaining a good credit score is crucial for securing loans, getting favorable interest rates, and achieving financial stability. Here are five effective strategies to help you improve and maintain your credit score:

1. Pay Your Bills on Time

One of the most critical factors in determining your credit score is your payment history. Late payments can significantly impact your score, so it is essential to pay all your bills on time. To ensure you never miss a payment:

• Set up automatic payments for recurring bills like credit cards, utilities, and loans.
• Use calendar reminders or budgeting apps to keep track of due dates.
• Contact creditors immediately if you foresee any issues with making a payment on time.

2. Keep Your Credit Utilization Low

Credit utilization, the ratio of your credit card balances to your credit limits, is another crucial component of your credit score. Aim to keep your credit utilization below 30%. To achieve this:

• Pay off your credit card balances in full each month. This also saves you money because you do not pay interest on any balance remaining on the credit card, which most of the time is 20% or more!
• If you carry a balance, make more than the minimum payment to reduce it quickly.
• Consider requesting a credit limit increase to lower your utilization ratio but avoid incurring new debt. There are also credit cards that have a lower annual fee or no annual fee.

3. Maintain a Mix of Credit Types

Having a diverse mix of credit accounts, such as credit cards, installment loans, and mortgages, can positively influence your credit score. Lenders like to see that you can manage different types of credit responsibly. However, do not open new accounts unnecessarily. Instead:

• Use a variety of credit products you need and can handle responsibly.
• Maintain a long history with your existing credit accounts.
• Be cautious about closing old accounts, as this can shorten your credit history.

4. Regularly Check Your Credit Reports

Monitoring your credit reports regularly can help you catch errors or signs of identity theft early. By law, you are entitled to a free credit report from each of the three major credit bureaus (Equifax, or TransUnion) annually. To stay on top of your credit:

• Request a free report from a different bureau every four months.
• Review each report for inaccuracies, such as incorrect personal information or accounts you did not open.
• Dispute any errors with the credit bureau immediately to have them corrected.

5. Limit New Credit Inquiries

Applying for new credit accounts can result in hard inquiries on your credit report, which can temporarily lower your credit score. To minimize the impact of new credit inquiries:

• Only apply for new credit when necessary and when you are confident you will be approved.
• Shop for loans within a short timeframe to minimize the effect of multiple inquiries.
• Prequalify for credit offers, which involves a soft inquiry that does not affect your score.

Maintaining a good credit score requires diligence and discipline. By paying your bills on time, keeping your credit utilization low, maintaining a mix of credit types, regularly checking your credit reports, and limiting new credit inquiries, you can achieve and sustain a healthy credit score. These practices will not only improve your financial health but also provide you with greater opportunities and peace of mind.

You can reach me at (437) 869-2864 if you have more questions or want to discuss your case in person.

Chris Lykidis

Mortgage Agent Level 1

License# M18001416

Email: lykidislending@gmail.com