5 ways to maintain a good credit score

There are a ton of benefits that follow a good credit score. Lower interest rate on your credit cards and loans, saving money on insurance and security deposits on new utilities and cellphone service are just a few of them.

good credit score
Are you're saving up to buy a house someday? And you’ll need a big loan for the same? Or do you want to pay less interest on your credit card? Either way, you need to improve your credit score. The key to getting better interest rates and lower fees.

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But the bad news is, building a credit score from scratch takes time. But fear not! There are some simple things you can do right away that will give you a good head start to your dream credit score!

We’ve put together a few ideas to help you bump up your score. Some are short-term while others take a little longer to show results — but ultimately, they’re all practical stuff that will take you less than a few minutes. Here are five ways to do so.

On-time every time

This goes without saying, pay our bills on time and every time. Making your payments on time is super important for all your bills, not just for your credit cards and loans. It goes for using all third-party services that report your payments to the credit bureaus. The moment payment activities take place on those accounts, it could end up on your credit report if you fall behind. So just continue to paying all your bills on time to maintain a good credit score.

Get low, get low

Keep your credit card balances low. The higher your credit card balance, the closer it is to your credit limit, the worse your credit score will be. Here’s the math, your credit card balances all combined should be within/below 30% of your combined credit limits. This is the only way you can consistently maintain a good credit score—and the lower, the better.

Even if you happen to cross 30% of your credit limit once, it is risky. You might have plans to pay off the balance when your payment is due, but card issuers will report your balance when your statement closes. So that’s the number that will be reflected on your credit report. It’s a good idea to keep tabs on your accounts online and pay enough to reduce your balances. Keep your balances as close to $0 as possible just before the billing month closes

Old is gold

Don’t close out your old credit cards. When you close a credit card it hurts your credit scores because credit card issuers no longer send updates to credit bureaus. The problem here is the credit scoring formula doesn’t count inactive accounts. And a few years later, the credit bureau will remove your history from your credit report altogether. Why is this a problem you ask? Losing your credit history shortens your credit age and causes your credit score to drop.

Limit the new

This is simple. If you keep your old cards, you’ll automatically limit your applications for new credit. New applications lead to new inquiries from issuers and too many credit inquiries will hurt your score. Therefore, avoid applying for multiple credit cards in a short period. Lenders will assume you’re risky. So ensure you’re applying for credit only when you really need it Opening a new credit card account as specified above will also lower your average credit age.

Keep watch on your credit report

You are super responsible we’re sure and you do everything right! But just because you do doesn’t mean everyone else will—especially not with your credit reports. Random errors can pop up on your credit report, thereby leading to a drop in your credit score.

There are multiple cases of identity theft and credit card fraud that led to inaccurate information on your credit report. So, if you keep an eye on your credit report throughout the year. It will help you detect mistakes sooner and maintain a good credit score.

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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