With all of the ways available to damage your credit score, it can be difficult to prevent your credit score from dropping occasionally. Fortunately, there are a number of methods that you can use that will help you keep your credit score as high as you can. A higher credit score can benefit you in many ways, including reducing the rate that you pay for many financial products and improving your chances of securing the loans, employment and housing that you desire. Paying your bills on time and following these tips will keep your credit score high.
Use Different Types Of Credit
To maximize your credit score, diversify the type of credit you are holding at any given time. Some people mistakenly believe that all types of credit are treated the same under the calculations used to determine their credit score. The truth is that people that have several types of revolving and non-revolving credit reflected in their credit history tend to have higher credit scores than people than only have a single type of credit, even if both have a spotless payment history. This is because companies want to see if you can handle all types of credit responsibly and are more likely to extend credit to the people that can demonstrate this responsibility.
Only Charge What You Can Pay Off
Carrying a balance on your credit cards will cost you a lot of money in interest payments and lower your credit score. Part of the calculation of your credit score is the ratio of the amount of credit you have available versus the amount of credit you have used. The less credit used, the higher your credit score will be. Paying off the balance of your credit cards each month will increase your credit score and prevent you from having to pay interest on the purchases you have made.
Leave Dormant Credit Accounts Open
Another thing that can unexpectedly harm your credit score is closing dormant credit accounts that you are not using anymore. Closing these accounts removes these amounts from your available credit, reducing your ratio of credit used to credit available. Instead of closing these accounts, allow them to remain open but remove the cards from your wallet so you are not tempted to use them. They can be placed in a safe spot in your home so they can be easily access in the event of a financial emergency.
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