Keep your oldest credit cards open FOREVERDo not EVER close your oldest credit account! This is one metric the credit rating agencies look at when calculating credit scores. If you have a credit card that you opened 10+ years ago, but you no longer use it because it is with a bank you have left, or you have found a card that has better rewards for you to book that next dream vacation, YOU SHOULD STILL KEEP YOUR OLD CARD OPEN. Length of credit is a credit monitoring factor that is very hard to keep up if you let old accounts close due to inactivity.
Keep LOW balances and HIGH credit limitsEach of these is a boon to credit scores, to begin with, but both combined lead to another important factor, credit utilization percentage. This is simply your balance divided by your credit limit. IMPORTANT TIP: IF you feel your credit limits are low, you can call your bank and ask them to increase them.
Pay your bills on timeThis includes not only credit card bills, but any bill, including utilities, mortgage, and medical bills. If you do not pay your bills on time, this shows companies looking to issue you credit a lack of responsibility and a hint that you may be overextending yourself. All this being said, it is important that you do not apply for a new credit card immediately before you are looking to get a mortgage or a car loan. If you know a big purchase is coming up, just hold off on applying for that bright, shiny, new card with all the perks until after you are approved for your loan. It’s quintessential that you work on keeping your credit score up and monitor it each month but be mindful of how you are checking it and how frequently- hard inquiries can negatively affect your credit score. You can check your credit score in a number of places as a soft inquiry:
- Equifax/Experian/TransUnion at annualcreditreport.com once a year for free
- Your Bank may have a feature that can estimate your credit score that is free to check any time
- Credit checking sites like Credit Karma that may or may not have limits on checking