Image Source: Flickr User Niklas Morberg
Getting and keeping a good credit score is not a matter of chance. Those with excellent credit work hard at protecting and improving their score. You can’t just hope for the best. A good credit score is the result of intention and healthy financial habits. Here is a look at seven habits of people with excellent credit scores and how to improve your credit score after bankruptcy or other financial upset.
People with good credit…
1 – Check Their Credit Reports Often for Errors
You can do everything right but see your score drop because of an error by one of the credit bureaus or a creditor. If a credit card issuer accidentally reports you missed a payment, were over the limit, or paid less than owed, that can hurt your score. Any mistake can hurt your score, so keep an eye out.
2 – Don’t Close Old Revolving Accounts
One of the biggest factors in your credit score is the average age of credit. That looks at how long all your credit accounts have been open on average and the older, the better. Closing old credit card accounts can lower your credit score even if all your other financial behavior is top-notch. Think twice before closing.
3 – Never Miss a Payment That Reports to the Bureaus
The first problems on credit reports are often when you miss just one payment on an account that reports monthly such as a credit card, car loan, or mortgage. That first missed payment can drop your score by 100 points. Smart consumers always pay these bills on time, every month, like clockwork.
4 – Don’t Pay Any Bills Late
Although the bills and debts that report to the three credit bureaus monthly have the greatest ability to impact your credit score, skipping out on any bill is a bad habit. Even bills that don’t routinely report, like medical invoices, can wind up in debt collections and on your credit report dropping your score.
5 – Keep Debt Levels as Low as Possible
Forget the adage about never going over 30% of your credit lines. In fact, it’s better to keep your debt levels as close to zero as possible. If you use your cards, pay them off in full each month, so you never get trapped in a debt spiral. People with excellent credit use their available credit lines sparingly.
6 – Don’t Open New Accounts Too Often
The more new accounts you open, the more it drops your average age of credit and your credit score with it. Occasionally opening a new account isn’t bad, but you must consider the impact of opening too many on this important facet of your credit score. Sticking with older accounts may benefit you more.
7 – Keep a Close Eye on Their Credit Score
People with excellent scores know their score and keep an eagle eye on it so that it doesn’t drop. Monitoring services can be a low-cost way to monitor your credit report activity, so you’re alerted if your score rises or falls so you can address any issues before they get out of hand and wreck your credit.
How to Improve Your Credit After Bankruptcy
If you have had a life event, like unemployment or an illness that keeps you out of work, your credit score may suffer. For those that choose bankruptcy to help deal with their debt, the next step is to rebuild your credit score. That starts with always paying bills on time and then rebuilding your credit starting with a secured credit scared and working towards a goal of rebuilding your score to better than it was before.
To find out more about improving your credit score after bankruptcy, contact Credit Score Keys.