You may not think that credit score and saving money go hand in hand, but in fact your credit score is really the driving factor on what you are paying monthly on interest rate. If you have the best credit score you can take advantage of the best rates on the market, and if your score is low, well it could mean expensive interest payments, or even worse, not getting approved at all. Try giving your credit score a boost by continuing a few behaviors.
Never Miss a Payment
If you miss a payment due date you could get hit with a late fee, and even a boost in interest rate, but when it goes thirty days past due is when your credit report is negatively impacted. The problem is that your score does down and it could take up to seven years for that ding to come off. Do yourself a favor and make sure that you keep track of all your monthly bills and are paid on-time, on or before the due date, even if it means writing down by hand each month to ensure bills are paid.
Pay Off Credit Card Accounts
Since we are on the subject of making payments, if you are in debt, then it is best to have a payoff plan with the largest monthly payments you can afford to make until the balance is gone. A large part of your credit score is made up of your credit availability compared to the debt balance, so the higher you are at your credit limit, the lower your score will go. Lenders want to see that you are a responsible borrower and not charge up every available dollar that you have, so keep that difference as far apart as you can.
Keep Zero Balances Open
Speaking of paying off any credit cards with a balance. It can take years to pay off a high balance, so by the time it’s down to zero your first instinct might be to celebrate by closing the account and not worrying about it any longer. This could actually hurt you, but as mentioned above for the credit availability, by closing the account you actually reduce what you have available, so if you have balances on other cards, this could actually kill your score. If you are looking to not use the card, you can simply cut up the card so you don’t use it but leave the account open.
A small, but still important piece to your credit score are the amount of inquiries showing. What this means is anytime you fill out an application and they pull credit, you may get hit with an inquiry and your score could tick down until they come off, which could be a couple of years. If you have plenty of applications it could give the impression that you are looking to charge up a ton of cards, even though that may not be the intention, you don’t want to have your credit pulled too often.