Credit scores have emerged to be vital for a healthy financial condition. Almost everyone knows how important it is to maintain a good credit score to get loans or even secure a good job. But do you know how to build a good credit score? Let us discuss some secrets to a healthy credit score that will see you enjoy financial abundance.
The factors that determine the credit score
There are several factors that go into deciding your credit score. Your income, the loans you have taken, your payment history and credit age are some of the factors that determine your credit score.
Your income level has a direct bearing on your credit score. With higher income, you can enjoy more credits without affecting your credit score So, try to improve your income level to have a good credit score.
The right number of credit cards
What is the right number of credit cards that you should hold? Maintaining too many credit cards will only lower your credit score as you qualify for less credit. Ideally, you should have two or three credit cards. Moreover, you should avoid taking cards whose limits increase automatically. High limits have a negative effect on your score. So, go for cards with lower limits.
Good habit of paying bills on time
It goes without saying that by paying bills in time you will create a good credit score. This applies to not only debts and loans but also bills for electricity and gases. So, inculcate the habit of paying all bills on time and enjoy a healthy credit score.
Pay attention to your payment history
Do you often forget to pay bills on time? This habit may affect your credit score adversely. We all forget to pay bills within due dates sometimes, but a chronic offender will have it reflected in his credit report. So make sure that you remember your bill dates and pay accordingly. Generally, more than one and up to five consecutive late payments will land you in the late payer list.
Keep old credit cards open
Closing old credit cards affects your credit score because those records will be removed from your credit report. By removing the credit history, your credit age will be shortened and that will make your credit score fall.
Along with these tips, you also need to check your credit report thoroughly to identify any error that may lead to inaccurate credit score. You should report the mistakes to the credit agencies and get them rectified. Building a respectable credit score is not difficult if you are diligent.