Credit and debts are amazing ways to avoid financial crisis. However, it must be understood that you need to use and utilize this mode of financial security only as a means to meet your needs and not your wants. If you have a huge credit and a bad credit score, it will significantly affect your ability to acquire another debt in the future, if you need one.
Hence, to make sure that your credit card debts and all of your other debts and bank loans are managed properly and that you have a good credit score, you must know how it all works. There are various factors that add to your credit scores and these are your level of debt, payment history, type of credit and credit age. This will either improve your credit score or damage your credit score. To make sure that your credit score is good, you need to follow these tips.
- Pay bills on time:
If any of your bills are left unpaid, it will damage your credit score. Paying the bills on time is the most important aspect that you need to take care of. The credit bureaus always pay attention to your bills and keep an eye whether you are paying them on time or not.
- Keep credit balance as low as possible:
Credit cards always offer you a huge credit limit. However, availing the entire credit limit is never a good idea. You need to keep your credit scores as low as within a 30% limit. It is quite difficult for you to manage your debts if it crosses this limit. When your debt statement comes, you will find it quite huge to pay this statement amount.
- Have only one credit card:
Having multiple credit cards is your way to unmanaged debts. You will never be able to manage and repay your credit amounts and debts. You must understand that credit cards are meant for needs and not for wants. It is very important that you have only one credit card and get rid of the multiple credit cards. Multiple credit cards mean difficulty in affording to repay the monthly repayment amount.
- Check your credit score:
Checking your credit score never affects your credit score. There is a strong misconception that this will impact your credit score. However, the fact is that you need to know your credit score so that you can repair it. Annual credit reports are available at the credit bureaus and you can request them to send a statement for your score.
- Pay interests as much as you can:
The faster you pay your interests, the faster your debt will be cleared off. This can significantly increase your credit score. If you need to have a good credit score that will enable you to acquire another debt in the future, it will be useful for you if you did not have any other debts. Just prioritize your debts and clear them off on time.