Five Habits for Better Credit

Good credit is a mixture of mathematical factors and personal habit. Once you’ve learned how to calculate your credit score, it’s time to examine your behaviors and how they affect your credit score. Start your journey by adopting these positive traits. They will enhance good behaviors and squash the bad.

Maintain positive accounts. 35 percent of your credit score depends on payment history. When pursuing better credit, it is critical to pay your bills in a timely and responsible manner.

Timely: Why not submit payments one week early? The habit of punctuality will strengthen your credit score and prevent absentminded lateness.

Responsible: It’s not enough pay the monthly minimum on your credit card each month. Accruing interest will increase the principal balance, creating a burden that will become overwhelming over time. Commit to paying down the principal and interest in order to free yourself of unnecessary debts.

Avoid wastefulness. Carelessness is the fast-track to a disorganized life, a serious problem in the world of personal finance. Leaving the lights on, spending too much on entertainment and letting your groceries spoil are just a few of the ways wastefulness can eat away at your bank account. When an emergency strikes, a lack of savings will force you to rely on credit rather than cash, an act that can lead to serious score damage. Examine your financial habits and try to cut costs by at least 15 percent. The result will help you avoid future credit problems.

Prioritize safety. Third-party interference can cause severe credit damage, making it important to value safety habits in your daily life. Keep your personal records in a safe place and never leave your credit cards and IDs unattended. Avoid suspicious-looking ATMs and other locations that are prime targets for identity theft. Avoid online thievery by shopping through encrypted sites only (i.e., sites that begin with https://). Order free copies of your credit reports every year and review them for mistakes and unlawful accounts. While technology provides many security measures, it’s up to you to validate its success.

Challenge emotions. Emotion can play a major role in credit health, from the way you spend to the way you save and invest. If you tend to cope with shopping, try to identify the emotional triggers that occur beforehand. Parlay your stress or frustration into another activity that won’t hurt your credit score. If you are overly controlling when it comes to investments, find a financial planner who will help you develop a long-term (and logical) retirement fund. Whatever your strategy, don’t allow emotion to overshadow good credit. Learn the habit of impulse control to help you through the tough times.

Be assertive. Credit is a dynamic force, an ever-changing grade that requires you to change with it. Don’t get comfortable in your financial life. Remember the five factors of credit scoring and assess your progress on a regular basis. Ask yourself:

Am I paying my bills consistently and on time?

Is my credit utilization below 25 percent?

Am I using my oldest accounts to maintain a lengthy credit history?

Am I applying for new credit when appropriate?

Am I limiting the amount of inquiries present on my credit report?

Answers these questions with action and your credit score will grow stronger every day. No matter your circumstances, the habit of assertiveness will help you find the right path.

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