Easy as 1, 2, 3

A three-step process to maintaining a good credit score

If you’ve had trouble keeping your credit score as high as you’d like it to be, it might help to simplify things a bit. Below is an easy, three step process for maintaining a high score. Follow these steps and watch your score not only increase, but stay up at the top.

Pay On Time

Paying all of your bills on time has a huge influence on your credit score. In fact, FICO and VantageScore — the two leading credit scoring companies — place the most importance on timely payments. If you’re more than 30 days late on any bill, that can hurt your score. The solution? Make as many bill payments as possible automatic. If you don’t like the idea of auto pay, try setting reminders on your calendar for a few days before each bill is due. Then be sure to go through each reminder and pay the full amount.

Use Less

As USA Today reports, the second-biggest factor impacting your credit score is your credit utilization ratio. That’s just a fancy way of describing how much credit you’re using compared to how much total credit you can access. Keep things simple here by never using more than 30 percent of your credit limit on your credit cards (individually and combined). If possible, keep it even lower than that. You can do this by spreading large purchases across several cards or paying small amounts of the credit balance during the month. The latter method helps keep the balance low and won’t leave you with sticker shock when it comes time to pay the full bill.

Watch It

Now that you’re tuned into the two major factors impacting your credit score, you should also check your credit report a few times per year. You can receive your credit report free of charge from each of the three major credit bureaus once per year, or you may have access through your financial institution. Take advantage of that and check your report for errors and report them immediately. Monitoring your report will keep you abreast of any other factors impacting your score that you need to address.

Chris O'Shea

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