19
Jun

credit repair

When it comes to achieving a good credit score, establishing credit is only half the battle. Keeping your good credit score and maintaining a strong credit report presents a new challenge altogether.

Watching your credit score decline isn’t fun. It also has wider implications. Poor credit can prevent you from purchasing a home, securing a car loan, or even getting hired for your next job.

It’s not uncommon for people to build strong credit only to see their card limits rise, and spending rise along with it. All of the sudden, they’re struggling to make their monthly payments and their credit begins to suffer.

Fortunately, establishing just a few good habits can help you keep your good credit. These habits are consistent among all people with good credit scores. It’s no coincidence that these habits also mirror the categories that determine how FICO scores are calculated.

How FICO Scores are Calculated

Before we dive into good credit habits, let’s take a look at how FICO scores are calculated. FICO score calculations are based on the following categories:

  • Payment history (35 percent)
  • Amounts owed (30 percent)
  • Length of credit history (15 percent)
  • Credit mix (10 percent)
  • New credit (10 percent)

Now that we have that squared away, here are the top five habits of people with good credit scores.

  1. They Pay Their Accounts on Time

Making on-time payments is one of the most important — and easiest — ways to establish and maintain good credit. That shouldn’t come as a surprise considering FICO places more importance on payment history than any other category.

A payment that is late by a few days isn’t anything to worry about. However, payments that are delinquent by 30 days or more will affect your score and can signal to creditors that you’re a credit risk. A borrower with a good credit score can expect to see their score drop by about 100 points in the event of a 30-day delinquency.

  1. They Keep Their Credit Card Balances Low

You shouldn’t max out your credit card with purchases you can’t afford to pay off just because your credit limit is $15,000. It’s recommended to keep your credit utilization below 30 percent, but the lower the better.

When creditors look at your credit utilization they see your ability to make payments on time. Credit card companies report utilization data once a month, so make your monthly payment on time and in full, if possible.

  1. They Keep Their Accounts Manageable

Creditors make a hard inquiry on your credit report every time you apply for new credit, which can hurt your score. Why? Multiple hard inquiries on your report can indicate that you’re living beyond your means, or struggling to make ends meet and need additional credit to fill the gaps.

Credit card offers promising tens of thousands of free miles or other incentives can be attractive, but only apply for credit if you truly need it. Not only will hard inquiries negatively impact your score, but more credit means you’ll be more likely to use it, driving up your balances and utilization. 

  1. They Utilize Multiple Types of Credit

It’s common to initially establish your credit history by acquiring a credit card, or maybe a student loan. Over time, your credit mix should diversify to include personal loans, mortgages, and car loans.

That’s not to say you should be running out and applying for different types of loans just to boost your credit score. In fact, doing so will likely have an opposite, negative effect. Instead, be patient and let each credit event come naturally. Apply for different loans as you need them and develop your history over time.

  1. They Develop a Strong Track Record

Borrowers with excellent credit scores build their history over time, with few to no examples of risk. As we mentioned, a single late payment can dramatically affect your score. Multiple examples of credit risk can reduce your score dramatically. After that, it takes years for those events to drop off your report.

Be patient. Good and excellent credit builds over time. But, also be proactive. If your credit history has improved since you first applied for credit, see if you can lower your interest rates with creditors. This will help you pay down your debts and improve your score.

Credit repair professionals 

After practicing good credit habits for an extended period of time, you might want to determine how your FICO score looks. You can do so for free. Discover provides a free credit scorecard with your FICO to both members and non-members. American Express members can also view their FICO score for free.

If you’re still not seeing the results you’d like in your credit score, professional credit repair services can help. While some credit repair services have garnered a bad rap, reputable companies will provide the comprehensive services that help members meet their goals.

A reputable credit repair service interacts directly with credit companies and helps them meet their obligations for your particular situation and plan. Then, they communicate with the credit bureaus to confirm that the appropriate changes have actually occurred.

Contact CreditRepair.com today to discuss your credit repair needs and options. We’re a trusted credit report repair services provider and the only company with direct partnerships with the three major credit bureaus.

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