There are many moving parts to maintaining and improving your credit score, so there are no perfect step-by-step rules. However, there are a few best practices you can follow to maintain the best score you can. This applies to both personal credit scores as well as business credit scores.
Always Pay Your Loans On Time
This may seem self-explanatory, but many people fall into a trap of either being unable to make payments or missing payments on accident. One way to avoid missing a payment accidentally is by setting up automatic payments that are withdrawn from your account on the same day every month. As long as you know the proper amount of funds are available to pay the monthly fee, an automatic payment keeps you accountable and helps boost your credit score. If you prefer not to set up automatic payments, you can also turn on electronic reminders to alert you within a certain time frame before payments are due.
Be Aware of Your Credit Utilization Rate
For loans or credit cards, there is almost always a credit limit. If you spend too close to your credit limit, your credit utilization rate increases which can negatively impact your credit score. Maxing out on even one credit card (even if you have multiple) can hurt your score, so it’s important to stay on top of how much credit you are using compared to how much you’re given. As a rule of thumb, aim to use 30% or less of your credit limit. The higher your debt climbs, the more likely it is that your credit score will drop.
Don’t Be Afraid to Gain Debt
For most people, debt is a “bad” or intimidating word. And while it’s critical to manage your debt and not overspend with funds you don’t have, gaining a bit of debt over time can help your credit score as long as you know you can pay it back on time. The longer credit history you have (with on-time payments), the more it helps boost your credit score because it shows lenders that you can effectively manage the borrowing process.
Keep On Top of Your Credit Reports
Every 12 months you are entitled to one free credit report check from the three major credit bureaus: Experian, Equifax, and TransUnion. This means you can check your reports for free three times per year. Errors and identity theft are not impossible, so you should annually monitor your credit report for anything that looks inaccurate or suspicious.
Some people are hesitant to check their credit reports because they think it will negatively affect their credit score. However, checking your credit score each year is deemed as a “soft inquiry”, which does not impact your credit score.
Stay in the Know with Credit Insights
Credit Insights with Republic Bank’s mobile banking app is a comprehensive program that provides free, ongoing access to your credit score and report, monitors for key changes, and finds savings opportunities on existing and new loans and credit cards. This program allows you to check your credit score, full credit report, and the factors that influence it, which helps make monitoring and improving your credit score easier. You can either check the scores that are automatically updated every month or choose to refresh your information daily.
The Credit Insights program also informs you by email if there are any major changes detected, such as a new account being opened, a change in address or employment, a reported delinquency, or a new inquiry, which helps you monitor for identity theft. When you check your credit file through Credit Insights, it will have no impact on your credit score.
Have more questions about maintaining a good credit score? Reach out to our experts at 800-526-9127 for additional information