Reduce your credit carb intake with these tips
Healthy eating and credit score maintenance have a lot in common. They both require focus, discipline and consistency. You can take steps to boost your credit to a score you’re satisfied with, but, much like eating healthy, it doesn’t take much to fall back into old habits. It's hard to know what makes or breaks a well-balanced score because you don’t always feel the effects directly.
Luckily, following these tips can help keep your credit score, and financial waistline, where you want it.
What makes up a healthy credit score?
Most people think their score is based entirely on credit card accounts, but those are only one type of credit considered. Typically, your credit score is made up of several components, such as the amount you owe, the length of your credit history, the timeliness of your payments, and your credit mix.
How to maintain a healthy score
In the digital age, keeping track of your credit score is easier than ever. This makes setting your goals nearly effortless, giving you a better understanding of where you're at and how to maintain healthy financial habits. A number of free score providers use the VantageScore model, allowing you to know where your credit is at so you can start your financial fitness journey.
Looking to start maintaining a healthy credit score? Here are a few ways to get started:
Keep credit card balances low
If you have high credit card balances, even if they aren't at your card's limit, that can put a dent in your score. To avoid this, keep your card balances within 30% of your credit limit. Charging more than 30% of your credit limit can be risky, even if you plan to pay it off in full once the billing statement arrives.
Keep your debt under control
For some, this is easier said than done. But if you have the capacity, reducing your debt balances can be beneficial. Together with paying more than the monthly amount you owe, you can also do things like taking advantage of balance transfers, limiting the amount you spend via credit cards, selling items from around the house and sticking to a monthly budget.
Getting rid of debt can take a lot of patience, persistence and discipline, so make sure you reward yourself every once in a while on your debt-reduction journey.
Pay your bills on time
Credit card bills aren't the only things that impact your score; cable bills, electricity bills and even library fines can affect your credit as well when reported to a national credit bureau. It is important to promptly pay all such accounts. If you worry about forgetting to pay your bills on time, there's an easy solution for this. Most service providers allow you to sign up for autopay, so your payment will get taken out automatically each month.
Keep a healthy credit mix
It seems counterintuitive but paying off an installment loan or closing an unused credit card can hurt your score. Paying debt down will help you in the long run financially, so the temporary dip isn't a huge worry. But when it comes to credit cards, make sure you think about why you're opening a second or third one and whether you'll use it.
Having a clear picture always helps
There's never a bad time to begin your credit diet. And the best way to start that process is to get a clear picture of where your score is. VantageScore's credit scoring model is favored by a variety of lenders and provides consumers with a clear and accurate view of their financial health. That way, you have the proper feedback to begin your financial wellness journey.