3 Tips to Maintain Good Credit

Obtaining a perfect credit score is perhaps one of the most difficult financial tasks in existence, primarily because it requires a great deal of discipline and persistence. However, once that perfect score is obtained it will not maintain itself, and keeping it can be just as difficult as building it. The following tips can help anyone maintain a good credit score without having to live frugally.

Using Credit Frequently

Surprisingly, one of the best ways to maintain good credit is to frequently use the credit limit for small purchases that are not a big financial burden. Making these types of purchases and repaying them consistently at the end of each month will display financial stability and reliability. It is important to never use more than 70% of the available credit limit at any given point in time, as one of the main factors that determines a credit score is the debt-to-credit ratio. Although it is wise to use the credit card frequently, it is best not to make such large purchases that it drives the debt-to-credit ratio above 70%.

Avoid Late Payments

Late payments are the plight of the credit card industry, with credit card companies charging billions of dollars in late fees every year. Every late payment has the potential to greatly impact the credit score, especially if the credit card is participating in the universal default policy, which states that any late payments give the credit card company the right to raise interest rates on all of the customer’s credit cards and loan accounts. It is best to send out credit card payments at least a week ahead of time to allow the credit card company time to process and post the payment to the account.

Pay Twice the Minimum

Paying the minimal balance every month is a sure way to gradually decrease one’s credit score, as credit card companies see this as a sign of financial instability. Paying twice the minimum every month is the best way to not only maintain good credit, but to continuously improve it as well. In fact, it would be ideal to repay the balance in full each month, especially when pursuing and maintaining a perfect credit score. Credit card companies usually reward cardholders who make lots of purchases and repay all debts in full at the end of the month.