The average credit score of Americans is increasing. See what you can do to make sure your score is the best. (iStock)
Credit scores are on the rise in the United States. According to the Experian 2020 Consumer Credit Review, the average credit score reached a record high of 710 last year, which is a seven-point increase over 2019. At the moment, 69% of Americans have a good credit score 670 or more.
Honestly, maintaining a good credit score will give you a lot of advantage in personal finances, including offering the best interest rates when signing up for new credit, insurance policies and refinancing opportunities.
Read on for five simple tips to keep your credit score at a high level and, if you want to know where your credit file is, you can use Credible to check your credit score without negatively impacting it.
5 BENEFITS OF HAVING A GOOD CREDIT SCORE
How to keep your credit score high
1. Manage your debt
The first key to improving your credit history is to pay off debts. If you are juggling multiple balances and payments now, you can consider debt consolidation as a repayment strategy. Debt consolidation involves using a new loan to pay off all of your existing bills and simplifying them into one monthly payment. Ideally, the new debt consolidation loan will also have a lower interest rate, which will save money in the long run.
While it is also important to keep an eye on the number of new accounts and difficult queries that appear on your credit report, if your outstanding balances are for credit card debt, taking out an installment loan in the form of a debt consolidation loan can, in fact, help improve your credit mix, which represents 10% of your overall FICO score. Likewise, your credit utilization rate can decrease, which is 30% of your overall FICO credit score.
Visit Credible can help you compare debt consolidation options to find the best personal loan rates for you, based on your credit score and history.
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2. Make payments on time
Then, after controlling your debt, do your best to make all payments on time. Major credit reporting agencies agree that payment history is one of the most important factors in determining a good credit score. For example, payment history accounts for 35% of your overall FICO score and up to 40% of your TransUnion score.
With that in mind, if you want to avoid a bad credit score, it is critical that you make your payments on time every month. If you need help remembering to make your payments on time, you can always set reminders or set up automatic payments from your bank account.
Not sure where you fit the credit score spectrum? Then, you should start using a credit monitoring service to track changes in your credit score. Credible can help you set up a free service today.
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3. Keep old credit cards open
Many people find it a good idea to close old credit card accounts that they no longer use. However, in reality, this can hurt your score. The length of your credit history (or age of credit) accounts for 21% of your TransUnion score and 15% of your FICO score. To do so, it is a good idea, from the point of view of credit reports, to keep old credit cards open, even if you rarely use them.
If you open a new credit card, remember that this may require a difficult consultation, but the new credit line can improve your credit utilization rate if you keep your balances low. Credible can help you compare and contrast different types of credit cards, so you can find the perfect fit.
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4. Monitor your credit
Next, it is important to monitor your credit regularly for signs of identity theft, fraud or other negative information. Simply put, if your personal information falls into the wrong hands, it could spell disaster for your credit score. With that said, checking your credit score and credit reports regularly for errors is important to your overall credit standing (you can do this for free today with Credible’s credit monitoring partners).
If you see that some information on your credit report is wrong, the first thing to do is to file a lawsuit. When contesting a credit report, you write a letter to the credit reporting agency asking them to correct the information in question. The credit reporting agency then has time to investigate the dispute and determine whether to make a change. In addition, if you suspect fraud, you can request a security freeze on your report, which prevents creditors from accessing your report and preventing others from opening accounts in your name.
If you don’t want to have to keep an eye on your report, you can always consider credit monitoring services. Credit monitoring services keep an eye on any direct or indirect consultation of your report and will inform you of any suspicious activity.
Check out some of the Credible partners here to sign up for free credit monitoring. You can get instant alerts on late payments, fraudulent activity, changes in credit scores and more.
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5. Keep credit card balances low
Finally, when your goal is to improve your score, it is important to keep your credit card balance as low as possible. Your credit utilization rate, which is a measure of the amount of credit you are using in relation to the total amount of credit available to you, accounts for 30% of your overall FICO score and 20% of your total TransUnion score.
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The final result
Credit monitoring is one of the most powerful things you can do to improve your credit score. Credible can help you see where you are without damaging your score.
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