Having a good credit score has several advantages. You’d be recognized as a trustworthy debtor among lenders, so your chances of being granted different loans will be relatively higher compared to other individuals whose credit scores are less than satisfactory.
But what is a credit score and how do you get it?
A credit score is a 3-digit number that indicates your likelihood of repaying your debt. Credit scores can be earned through your credit company, or by purchasing them from credit reporting companies or using a credit score service.
If your credit score is at risk of going unsatisfactory, you can obtain a title loan in Salt Lake City, among many other places, and get money quickly to pay a past-due debt, such as a car loan. Your collateral would be your car title and not the car itself, so you can keep the car while paying your lender.
That said, here’s how to maintain a good credit score and what you can do if it threatens to go bad.
- Pay All Your Bills on Time
Phone bills, utility bills, and so on should always be paid on time. Even if not all bills are reported to the credit bureaus, those that you didn’t pay on time could be included on your credit report, and that would affect your credit score.
- Control Credit Card Usage
The convenience of owning a credit card makes it so tempting to use it all the time, but spending so close to the credit limit can put a dent on your credit score. It is recommended to use only 30% of your combined credit limits to keep a good credit score.
And speaking of credit card, it’s also recommended to keep your old cards open. Even if you don’t use that credit card anymore, your credit score for that account still remains as well as your credit history. Closing a credit card will result in a shortened credit age, which will also reduce your credit score.
- Don’t Apply For Too Many Loans
Your good credit score can take a quick turn for the worse if you have too much credit inquiries. Only apply for a new loan when it’s absolutely necessary.
What to Do When Your Credit Score Goes Bad
If by some uncontrollable circumstance you experienced a drop in your credit score, it’s not yet too late — get back on your feet, and face your lenders to prove to them that you can pay your debts and deserve a better credit score.
Apply for new credit again, but avoid prepaid “credit cards.” They don’t report to credit bureaus, because they’re not authentic credit cards. Also be wary of subprime credit cards, because their interest rates are high.
If your applications are denied, don’t go applying for others right away. Wait for the letter citing the specific reasons you were denied. If not your bad credit score, it could be your income that impacted the decision of the credit company.
Assess your past habits, too; did you use to buy things you can’t afford? Or did you always pay your debts past the deadline? Abandon the habits that led you to a bad credit score, and practice discipline moving forward.
Once you’ve improved your spending habits, meaning you no longer spend close to your credit limit and pay your bills on time, your bad credit will turn into good credit. This will be your chance to build trust among your lenders once again, so maintain the better habits that you’ve adopted.
Meta Title: Debt Management Tips to Maintain a Good Credit Score
Meta Description: When you have a good credit score, you could be tempted to apply for more loans, but doing this can have the opposite effect. Read on to learn how to properly maintain a good credit score, and what you can do when it drops.