So, you’ve been working hard to increase your credit score from nothing (or very low) and you’ve finally made improvements! Hopefully, you’re beginning to reap the benefits of a higher credit score: lower interest rates, easier approval on loans, higher credit limits, and maybe even things that shouldn’t be related to credit, but are… like getting better jobs or better apartments.
But now that you’ve made these improvements, you need to maintain it. Fortunately, that’s often simpler than building it up from a very low score, but it’s still something you’ll need to put effort and care into if you don’t want to slip back to where you started. Here are just a few good credit habits that will help you maintain a good credit score:
First thing’s first, and this should hopefully be an obvious–and easy–one: whatever you did to build up your credit in the first place, keep up the good work! From paying down debt to paying bills on time, from not carrying credit card balances to sticking with lines of credit for lengthy periods of time, all the healthy credit habits that helped you get this high credit score will also help it from dropping in the future.
You spent a lot of time and energy staying diligent with your money and building your credit, and none of that effort has gone to waste–keep up the great work and you’ll keep up the great score.
One of the wonderful benefits about having a higher credit score and being a trusted credit user is that you’ll start to see higher credit limits offered on your credit cards. This is fantastic as it gives you more of a buffer to use credit and allows you to make larger purchases with your lines of credit.
However, it can also be tempting to see a higher limit and increase your spending to match, and this is a dangerous game to play! Not only does higher spending put you in greater danger of not being able to pay off your debts (especially if your income hasn’t continued to increase), but the closer you spend towards your credit limit, the more your score will be dinged. Experts recommend only utilizing about 30% of your available credit, so if you’ve got a credit limit of $10,000, you never want to be carrying a balance of more than $3,000 if you can help it.
With more available credit and potentially more lines of credit open to you, this also raises the chances of errors appearing on your credit report–and that can really hurt you if you aren’t careful!
The credit reporting process can be frustratingly opaque, but thankfully, you can view your credit report for free once a year and dispute any credit errors that you find. “Late” payment that you know you made on time? Dispute it! Credit score says you hit your credit limit when you never came close? Dispute it! If you can prove that you’ve been responsible with your credit, you shouldn’t take the hit that an error will give you–but this only works if you pay diligent attention to your credit report.
Just like increased credit limits, a higher credit score will also open the doors to new lines of credit, which can be a double-edged sword. It’s tempting to open a bunch of credit cards or take out a bunch of loans now that you have lower APRs and interest rates due to your high credit score, but when the credit reporting agencies see you taking out a lot of credit in a short period of time, they often see that as a sign of financial instability, which can in turn lower your credit score dramatically.
So stay the course–it’s fine to take advantage of new credit opportunities if you need them, but remember that credit is not free money, and be judicious and responsible when you’re considering opening up new lines of credit. Do what makes sense for your current financial situation and don’t sign up for every new offer that comes in the mail, and you’ll be just fine.
It’s hugely important to safeguard your credit score, especially when you’ve spent so much time and effort building it up to something high and stable. There are plenty of opportunities to fall back into old habits and tank your score again, but by staying on top of your spending and maintaining financial responsibility, you should be able to maintain what you’ve built and take advantage of the new opportunities available to you.
At Spotloan, our simple online application process can help you qualify for the money you need, even if you have bad credit or need a loan quickly. All you have to do is go fill out our application to see if you qualify, and you could receive a decision within minutes. Fill out our application now!
A note from Spotloan: We hope this article has provided some helpful tips as you prepare to file your taxes. However, as with any important tax-related decision, we suggest that you reach out to a qualified tax professional with any questions you may have.